Wingstop Inc (WING)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	—	—	—	93.46	1.15	85.80	81.70	104.87	1.07	—	87.89	—	1.44	82.29	76.47	81.09	1.21	75.21	41.05	53.70
Days of sales outstanding (DSO)	days	11.47	10.46	10.74	10.02	9.84	9.96	9.49	—	9.66	9.93	8.87	8.09	10.48	8.07	7.86	8.22	7.23	8.22	9.07	9.06
Number of days of payables	days	11.97	18.40	11.15	13.34	10.13	11.83	14.96	17.95	14.36	9.81	8.91	13.92	16.12	12.67	11.12	11.02	11.14	7.65	9.89	13.62
Cash conversion cycle	days	-0.50	-7.94	-0.40	90.14	0.86	83.92	76.23	86.92	-3.63	0.11	87.85	-5.83	-4.20	77.69	73.21	78.30	-2.70	75.79	40.23	49.14

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 11.47 – 11.97
= -0.50

The cash conversion cycle of Wingstop Inc has exhibited significant fluctuations over the specified periods. The cash conversion cycle is a metric that assesses the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to September 30, 2020, the cash conversion cycle decreased from 49.14 days to 75.79 days, indicating an increase in the time it took for the company to convert its resources into cash.

However, a drastic improvement was observed by December 31, 2020, and March 31, 2021, where the cash conversion cycle reduced to -2.70 days and 78.30 days, respectively. A negative cash conversion cycle implies that the company was able to collect cash from sales before paying suppliers for inventory, reflecting strong cash management efficiency.

The trend continued in the subsequent periods, with fluctuations in the cash conversion cycle reaching as high as 87.85 days on June 30, 2022, before dropping to 0.11 days on September 30, 2022. These fluctuations suggest potential issues in managing inventory, accounts receivable, and accounts payable efficiently.

As of December 31, 2024, the company had achieved a negative cash conversion cycle of -0.50 days, indicating continued effectiveness in managing its cash flows in relation to its working capital management.

Overall, the analysis of Wingstop Inc's cash conversion cycle highlights the company's efforts to optimize its working capital efficiency, as evidenced by the variability and improvement in the metric over the specified periods.