Chipotle Mexican Grill Inc. (NYSE:CMG)

The analysis of the quarterly financial data reveals several key trends regarding the company's operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio exhibits fluctuations with a general pattern of moderate variation over the periods. It begins around 211-213 ratios in early 2021, decreases towards the end of 2021 to the upper 170s, then recovers to over 200 in mid-2022 and peaks at 218.61 in mid-2024. However, there is a notable decline in late 2024 to around 161.15, followed by some recovery toward 188.55 by late 2025. This indicates variability in how quickly inventory is sold and replaced, with periods of both accelerated and slowed inventory movements.

Receivables Turnover

Receivables turnover shows considerable volatility. It starts in the low 90s in early 2021, peaks at 118.06 in late 2021, then experiences sharper peaks and valleys with a dramatic rise to 152.24 in mid-2023, followed by sharp declines and subsequent increases. This reflects fluctuating efficiency in collecting receivables, with some quarters evidencing rapid collections and others slower, likely affecting cash flow.

Payables Turnover

Payables turnover ratios remain relatively stable within a band of approximately 33 to 42 across the entire timeframe. There are slight increases particularly in mid-2023 reaching 42.59 and again varying throughout later periods, suggesting consistent management of payment obligations without significant disruption or acceleration.

Working Capital Turnover

Working capital turnover demonstrates substantial variation. It rises significantly from around 10 in early 2021 to a peak of 37.95 in mid-2022, indicating heightened efficiency in using working capital to generate revenue. Subsequently, it declines and stabilizes between roughly 14 and 20, with sporadic increases, reflecting changing operational dynamics in managing short-term assets and liabilities.

Average Inventory Processing Period

This metric remains constant at 2 days across all periods, indicating a consistently rapid turnover of inventory irrespective of fluctuations in the inventory turnover ratio. This suggests that the company maintains very short inventory holding periods throughout.

Average Receivable Collection Period

The average receivable collection period fluctuates slightly between 2 and 5 days, with occasional increases to 5 days in specific quarters such as end of 2021 and mid-2025. These minor variations align with the volatile receivables turnover, indicating some variability in collection efficiency, but overall maintaining a relatively short collection horizon.

Operating Cycle

The operating cycle, which sums inventory and receivable periods, stays mostly stable between 4 and 7 days. There are minor increases to 7 days in some quarters, but the company consistently operates with a short duration from purchasing inventory to collecting receivables.

Average Payables Payment Period

The average payables payment period varies narrowly between 9 and 11 days. This consistency suggests stable payment terms and timing with suppliers.

Cash Conversion Cycle

The cash conversion cycle remains negative throughout all periods, ranging approximately from -2 to -6 days. This indicates the company effectively manages its payables and receivables to receive cash before it has to pay its suppliers, which is generally favorable for liquidity purposes. Slight fluctuations in this metric reflect the underlying changes in collection and payment periods, but the consistently negative cycle suggests strong working capital management.

In summary, the company demonstrates a generally effective control of working capital elements, with particularly strong performance in inventory turnover and cash conversion cycle metrics. Notable volatility exists in receivables turnover and working capital turnover ratios, which may warrant further monitoring to understand underlying operational or market factors impacting collection and utilization efficiency.

The analysis of the financial data reveals several notable trends regarding the restaurant operating costs, inventory levels, and inventory turnover ratios over recent quarters.

Restaurant Operating Costs (exclusive of depreciation and amortization)

The operating costs for restaurants exhibited a generally increasing trend throughout the periods observed. Starting from approximately 1,352 million USD in the first quarter of 2021, costs steadily rose each quarter, reaching over 2,267 million USD by the third quarter of 2025. Although some quarters showed modest decelerations in growth, the overall trajectory remains upward, indicating either increased operational scale, inflationary pressures, or higher input costs over time.

Inventory Levels

Inventory values fluctuated but generally displayed moderate growth with intermittent volatility. Starting at around 24 million USD in early 2021, inventory rose to levels above 49 million USD by mid-2024 before declining again in some subsequent quarters to approximately 40-46 million USD. This volatility might suggest changes in inventory management strategies, supply chain adjustments, or responses to demand variability, with occasional stock build-ups followed by drawdowns.

Inventory Turnover Ratio

The inventory turnover ratio demonstrated variability but remained generally high, reflecting efficient inventory usage relative to cost of goods sold. Ratios fluctuated between roughly 160 and 220 times per year, with some quarterly dips noted around late 2024 when the turnover ratio dropped to near 161, indicating slower inventory movement during that period. Higher turnover ratios in mid-2022 and early 2024 suggest periods of improved inventory efficiency. The variability points to dynamic inventory management adapting to operational or market conditions.

In summary, operating costs show a clear upward trend, likely driven by expansion or increased expenses. Inventory levels are more volatile but trend upwards overall, with occasional adjustments. Inventory turnover ratios remain relatively high, reflecting efficient management despite some fluctuations. These patterns combined indicate a growing operation with active inventory control aimed at balancing stock availability with cost efficiency.

Revenue Trends

Revenue shows a generally upward trajectory over the multiple-year period, indicating consistent growth in sales. Starting at approximately 1.74 billion USD in March 2021, the revenue experiences fluctuations each quarter but maintains an overall positive trend. Notably, from March 2024 through June 2025, the revenue levels remain high, ranging between about 2.7 billion to over 3 billion USD, reflecting a substantial increase compared to earlier periods. Despite minor quarterly dips, the company sustains growth momentum in top-line performance.

Accounts Receivable Patterns

The net accounts receivable show notable variability across quarters. Early in the timeline, values generally fluctuate between roughly 68 million USD and just over 100 million USD. Some quarters, such as December 2021 and December 2023, display spikes in accounts receivable reaching approximately 106-115 million USD. This variability suggests fluctuating collections or sales terms impacting the receivables balance. The most recent periods show continued fluctuations, with some elevated values such as 143 million USD in December 2024, implying possible delays in customer payments or changes in credit policies.

Receivables Turnover Ratio

The receivables turnover ratio exhibits significant variability, indicating changes in efficiency of collecting receivables. There are distinct periods where this ratio peaks and troughs dramatically. For instance, the ratio is relatively high in Q1 2023 at 136.37 and even higher in Q2 2023 at 152.24, suggesting faster collection cycles during these times. Conversely, dips are observed in quarters such as Q4 2021 (75.77) and Q4 2022 (80.79), reflecting slower receivables collection. The fluctuating pattern implies inconsistent collection efficiency which could be influenced by changes in credit terms or customer payment behaviors.

Overall Financial Implications

The positive revenue growth trend demonstrates strong sales performance, but the fluctuations in accounts receivable and the related turnover ratio highlight potential volatility in cash collections. Periods with lower turnover ratios combined with higher accounts receivable balances may signal increased credit risk or delays in cash inflow. Monitoring these metrics closely is advisable to manage working capital effectively and to maintain liquidity despite rising revenues.

The financial data reveals several noteworthy trends in the operating costs and accounts payable metrics over the analyzed periods.

Restaurant Operating Costs, Exclusive of Depreciation and Amortization

The operating costs display a generally upward trend throughout the reported quarters. Starting from approximately $1.35 billion in the first quarter of 2021, these costs incrementally increase to over $2.26 billion by the third quarter of 2025. There are periods of relatively steady costs, specifically around late 2022 and early 2023, but the overall direction remains an increase. This suggests rising expenses related to restaurant operations over time.

Accounts Payable

Accounts payable figures fluctuate over the quarters without a consistent trend. Values vary from around $140 million to over $260 million, with noticeable peaks and troughs. Notably, after a low point near the middle of 2021, several spikes occur, such as in the third quarters of 2023 and 2025, indicating possible variations in the timing or volume of payments to suppliers or changes in purchasing strategies.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly a company pays off its suppliers, shows variability within a range approximately between 32 and 42 times per year. Peaks in the ratio often correspond with declines in accounts payable or increases in operating costs, reflecting efficient payment cycles in certain periods. However, there is no clear long-term increasing or decreasing trend, indicating that the frequency of settling payables has fluctuated around a consistent average over the analyzed timeframe.

Overall, the data suggests a steady growth in operational expenses related to restaurant costs, which could reflect expansion, inflationary pressures, or other cost dynamics. The accounts payable and turnover ratios display cyclical fluctuations without clear directional shifts, indicating variable but controlled management of payables in relation to growing expenses.

Working Capital

The working capital figures exhibit notable fluctuations over the observed periods. Initially, there is a downward trend from early 2021 through early 2022, with working capital declining from approximately 623 million to 213 million. From mid-2022 onwards, working capital generally shows recovery and growth, reaching a peak near 743 million in mid-2024 before slightly retreating towards the end of the timeline. The level remains substantially higher in this latter period compared to the early 2022 trough, indicating a potential stabilization and reinforcement of short-term liquidity.

Revenue

Revenue displays an overall increasing trend throughout the entire timeline. Starting around 1.74 billion, revenue grows steadily with some variations each quarter, reaching a high point above 3 billion by mid-2025. The progression is consistent, with occasional quarterly slowdowns but no enduring declines. This trend points to ongoing business expansion and possibly increased sales volumes or price adjustments contributing to higher top-line performance.

Working Capital Turnover Ratio

The working capital turnover ratio, computed as revenue divided by working capital, demonstrates substantial volatility. Early in the period, it ranges between 10 and 15, but a sharp increase occurs in 2022, peaking near 38 by mid-2022. This reflects a period of lower working capital combined with rising revenue, indicating more efficient use of working capital or tight liquidity. Post-2022, the ratio declines and stabilizes in the range of 14 to 20, suggesting a moderation in turnover efficiency as working capital rises and revenue growth persists. The final data points show a modest increase, implying renewed improvements in working capital utilization.

Summary of Trends

The financial data reveal a cyclical pattern in working capital coincident with a steady upward trajectory in revenue. The divergence and convergence between these two metrics significantly influence the working capital turnover ratio. Early 2022 represents a period of lean working capital and high turnover, which normalizes as working capital levels recover. Ultimately, the firm appears to balance liquidity and operational efficiency, maintaining growth while managing working capital prudently.

The analysis of the financial ratios over the observed quarters indicates a fluctuating pattern in the inventory turnover ratio, while the average inventory processing period remains constant.

Inventory Turnover Ratio

The inventory turnover ratio exhibits variability across the periods. It starts high at approximately 211 in early 2021, experiences some fluctuations through the year reaching a low near 177 by the end of 2021. In 2022, the ratio rises again, peaking over 214 mid-year before declining toward the end of the year. The trend continues into 2023 and 2024 with periodic increases and decreases, including a notable dip to around 161 in late 2024, followed by recovery in subsequent quarters. Overall, the ratio demonstrates a pattern of cyclical variation rather than steady growth or decline.

Average Inventory Processing Period

The average inventory processing period remains stable at 2 days throughout the entire timeframe. This consistency suggests that the company maintains an efficient inventory management cycle with no significant changes in how quickly inventory is processed.

In summary, while the turnover ratio experiences regular fluctuations that may reflect changing sales volumes, inventory policies, or market conditions, the consistent processing period underscores stable operational efficiency in inventory handling across all reported quarters.

The analysis of the quarterly receivables turnover ratio and average receivable collection period reveals distinct fluctuations over the observed periods. The receivables turnover ratio, which measures the efficiency of credit and collection efforts, shows variability ranging from a low point around 75.77 to peaks exceeding 152.24. Such variation indicates inconsistent collection efficiency across quarters, with notable spikes suggesting periods of accelerated collections or fewer receivables outstanding. Conversely, troughs in the ratio may indicate slower collection or increased receivables balances.

In examining the average receivable collection period, which represents the average number of days to collect receivables, the values consistently remain low, generally between 2 to 5 days. This short collection window indicates a strong ability to convert receivables into cash promptly. Minor increases to 5 days appear intermittently but do not represent sustained elongation in receivables collections, which supports an overall robust credit management practice.

The interplay between these two metrics reflects a generally healthy receivables management system with occasional volatility. Periods with a high receivables turnover ratio typically correspond with a low average collection period, reinforcing efficient collections. However, the observed cyclical patterns and occasional dips in turnover ratio coupled with slightly longer collection periods suggest that external factors or operational changes may impact collection efficiency temporarily.

Overall, the data indicates sustained strong performance in receivables management, characterized by quick turnover and short collection periods, despite some fluctuations that merit monitoring to ensure continued effectiveness in credit and collection operations.

The analysis of the financial data reveals consistent patterns in inventory management with the average inventory processing period remaining stable at 2 days throughout the entire period under review. This indicates a steady and efficient inventory turnover process without significant variation.

The average receivable collection period exhibits minor fluctuations over the quarters analyzed. It mostly ranges between 3 and 5 days, showing some variability but generally maintaining a short timeframe for receivables collection. This suggests that the company manages credit sales and collections efficiently, with occasional slight shifts that may reflect seasonal or operational changes.

The operating cycle, which combines the average inventory processing period and the receivable collection period, follows a similar pattern with values oscillating primarily between 5 and 7 days. The operating cycle displays a slight increase in some quarters, indicating periods where the total time to convert inventory into cash lengthens marginally, but it mostly remains within a narrow range. This stable operating cycle suggests consistent liquidity and operational efficiency.

Inventory Management

Average inventory processing period remains constant at 2 days, reflecting consistent and efficient inventory control.

Receivable Collection

Average receivable collection period varies between 3 to 5 days, indicating effective receivables management with minor fluctuations likely due to external or transient factors.

Operating Cycle

Operating cycle values fluctuate moderately between 5 and 7 days, showing stable overall operational efficiency and liquidity without significant disruptions.

Payables Turnover

The payables turnover ratio demonstrates variability throughout the observed periods. Initially, the ratio fluctuates around the mid-30s to high 30s, with a notable peak at 42.59 during June 30, 2023. Following this peak, the ratio experiences a decline towards the end of the timeline, settling around the low to mid-30s by September 30, 2025. This pattern suggests that the company’s efficiency in managing its payables has periods of strong performance interspersed with intervals of reduced turnover speed. The highest ratio near mid-2023 indicates a period when the company paid its suppliers more frequently, while the later decline might reflect a strategic extension in payment timing or changes in supplier terms.

Average Payables Payment Period

The average payables payment period remains relatively stable over the quarters, ranging primarily between 9 and 11 days. Slight decreases to 9 days correspond with some of the higher payables turnover ratios, indicating quicker payments to suppliers during those times. Conversely, the periods with 10 to 11 days of payment duration correlate with slightly lower turnover ratios, reflecting a modest lengthening in payment terms. This consistency in the payment period points to a controlled and steady approach in managing payables, with only minor adjustments over the examined timeframe.

Overall Insights

The relationship between the payables turnover ratio and the average payment period reflects the typical inverse correlation expected between these metrics. Despite some fluctuations, the company maintains a generally consistent approach to payables management, oscillating between quicker and slightly extended payment strategies. The spike in turnover ratio in mid-2023 accompanied by a drop in payment period demonstrates a period of accelerated supplier payments, which could be attributed to operational demands or favorable cash flow conditions. The subsequent moderation in turnover suggests a return to a more balanced payment cycle. Overall, the data indicates effective short-term payables management with deliberate adjustments tailored to operational needs.

The financial metrics related to working capital management demonstrate consistent patterns over the observed periods.

Average Inventory Processing Period

This metric remained perfectly stable at 2 days throughout all quarters analyzed. This consistency suggests a highly efficient inventory turnover process with no significant changes in how inventory is managed or processed.

Average Receivable Collection Period

The collection period fluctuated slightly between 2 and 5 days, generally remaining low. Notably, the period experienced minor increases in some quarters, such as December 2021 and December 2022, reaching 5 days, and a low of 2 days in June 2023. Overall, the receivable collection period indicates swift collection of receivables, with some variability that could reflect changes in customer payment behavior or credit policies.

Average Payables Payment Period

This period stayed within a narrow range of 9 to 11 days. The slight variations appear random rather than trending and show that the company consistently pays its suppliers within roughly 9 to 11 days, maintaining stable payment terms throughout the years.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout all periods, fluctuating between -6 and -2 days. This indicates that the company generally receives cash from customers faster than it needs to pay its suppliers, a favorable liquidity dynamic. Although some quarters like June 2025 recorded a less negative cycle at -2 days, most quarters show a cycle near -4 to -5 days, highlighting consistent efficiency in managing cash flow.

In summary, the data portray a company with disciplined and steady working capital management. The stable inventory and payables periods combined with a consistently low receivables collection time contribute to a negative cash conversion cycle, reflecting effective operational liquidity management and timely cash inflows relative to outflows.