Chipotle Mexican Grill Inc. (NYSE:CMG)

The financial ratios and periods analyzed reveal several noteworthy trends in the company's operational efficiency and liquidity management over the observed time frame.

Inventory Turnover

The inventory turnover ratio exhibits fluctuations, generally staying within a high range. Starting from approximately 187 in early 2020, it shows some increase, peaking above 220 towards late 2024, before tapering slightly below 170 by March 2025. This suggests relatively consistent but variable inventory management efficiency, with occasional improvements in turning over inventory more rapidly. The stable average inventory processing period of 2 days confirms a consistently fast inventory cycle.

Receivables Turnover

The receivables turnover ratio shows considerable variability, ranging from a low around 57 in early 2020, increasing sharply to highs above 150 in late 2021 and 2023, then fluctuating between 78 and 117 towards early 2025. The corresponding average receivable collection period generally decreases over time, hovering near 3 to 5 days, indicating an improvement in collection efficiency and faster cash inflows from receivables.

Payables Turnover

The payables turnover ratio remains relatively stable throughout the periods, mostly fluctuating between approximately 33 and 43. This reflects consistent payment practices to suppliers, supported by an average payables payment period mostly around 9 to 11 days, implying steady management of payment obligations without significant acceleration or delay changes.

Working Capital Turnover

The working capital turnover ratio indicates a positive trend, initially near 10 in early 2020 and peaking around 38 in mid-2022 before normalizing to the 15-20 range by early 2025. This suggests an improvement in the efficient use of working capital to generate sales, particularly evident around mid-2022. The variation points to periodic enhancements in operational efficiency impacting working capital utilization.

Operating Cycle

The operating cycle shortens modestly from about 8 days in early 2020 to around 5 days in recent periods. This reduction is attributed to both quicker inventory turnover and reduced receivables collection periods. A shorter operating cycle indicates improved operational efficiency by minimizing the time between the acquisition of inventory and receipt of cash from sales.

Cash Conversion Cycle

The cash conversion cycle consistently remains negative between -1 and -6 days across all periods, occasionally reaching as low as -6 days. A negative cash conversion cycle implies the company receives cash from customers before it pays its suppliers, which is a strong indicator of favorable liquidity management. This pattern suggests sustained operational cash flow advantages and effective management of receivables and payables to optimize working capital.

Overall, the data reflect a company maintaining efficient inventory and receivables management, with control over payables resulting in enhanced cash flow timing. The consistent negative cash conversion cycle further emphasizes effective liquidity management. The working capital turnover ratio's peak and subsequent normalization may warrant monitoring but generally indicate good utilization of financial resources to support sales.

The analysis of the quarterly financial data reveals notable trends in restaurant operating costs, inventory levels, and inventory turnover ratios over the observed periods.

Restaurant Operating Costs, Exclusive of Depreciation and Amortization

There is a consistent upward trend in restaurant operating costs from March 31, 2020, through March 31, 2025. Costs increased from approximately 1,161,905 thousand USD to a peak near 2,141,631 thousand USD by the end of 2024, with some slight fluctuations within quarters. This steady increase indicates intensifying operational expenses, possibly linked to expansion, inflationary pressures, or increased activity levels. The growth in costs appears fairly linear, with no significant contractions or abrupt changes.

Inventory

Inventory values exhibited an overall increasing pattern from March 31, 2020, to early 2024. Starting near 23,335 thousand USD in early 2020, inventory peaked at approximately 49,848 thousand USD in December 2024 before slightly declining to around 41,387 thousand USD in March 2025. The fluctuations within individual quarters suggest adjustments in stock levels possibly driven by demand forecasting or supply chain management. The inventory increases parallel the rising operating costs but show more pronounced volatility.

Inventory Turnover Ratio

The inventory turnover ratio displays considerable variability throughout the periods observed. The ratio ranged mostly between approximately 160 and 220, reaching a high point of about 218.61 in September 2024 and dipping to near 161.15 in December 2024. These fluctuations suggest periodic changes in how efficiently inventory is managed and converted into sales. Higher turnover ratios generally point to effective inventory management and brisk sales, whereas lower values may signal slower sales or excess stock. The variation near the end of 2024 indicates some inconsistency or adjustment challenges in inventory optimization.

In summary, the company has experienced increasing operating costs coupled with rising inventory levels, with inventory turnover ratios fluctuating but remaining relatively high, reflecting generally effective inventory management despite some periodical variation. The financial data imply operational growth accompanied by active inventory control measures, although the recent volatility in turnover ratios near the end of the period merits monitoring to ensure sustained efficiency.

The quarterly financial data reveals several notable trends over the observed periods.

Revenue

The revenue demonstrates a generally upward trajectory with fluctuations reflecting seasonal or operational variations. Starting at approximately 1.41 billion in the first quarter of 2020, revenue experienced consistent growth with some minor declines in the later quarters of 2022 and 2023. The overall revenue increased significantly by the first quarter of 2025, reaching close to 2.88 billion. This indicates sustained expansion and increased sales over the five-year span, despite occasional short-term declines.

Accounts Receivable, Net

The accounts receivable, net, exhibits variability without a clear unidirectional trend. Initial values around 63 million at the beginning of 2020 showed increases and reductions across quarters. Notable spikes occurred at year-end quarters, such as December 2020, December 2022, and December 2024, where receivables peaked significantly, reaching above 100 million in some cases. This cyclical pattern suggests seasonality in collections or possibly business cycle effects impacting account balances. The fluctuations highlight periods where credit extended to customers grew temporarily before subsequent collection or adjustment.

Receivables Turnover Ratio

The receivables turnover ratio shows a pronounced inconsistency with wide swings across quarters. Initial data from mid-2020 onward start with extremely high turnover ratios above 50, reaching peaks above 150 in quarters such as June and September 2023. These high turnover rates imply rapid collection of receivables relative to credit sales during those periods. However, intermittent drops below 100 highlight variability in collection efficiency or changes in credit policies. This ratio’s volatility hints at fluctuating operational or external factors influencing the liquidity of receivables.

In summary, the data reflects a company experiencing revenue growth with periodic fluctuations in accounts receivable and corresponding turnover efficiency. The marked seasonality in receivables and turnover metrics suggests operational cycles impacting working capital management. Despite these variances, the upward revenue trend indicates robust business expansion over the examined timeframe.

The quarterly financial data reveals certain notable trends in the restaurant operating costs, accounts payable balances, and payables turnover ratio over the analyzed periods.

Restaurant Operating Costs (Exclusive of Depreciation and Amortization)

The operating costs steadily increased from $1,161,905 thousand in Q1 2020 to $2,121,631 thousand in Q1 2025. This represents a near doubling over five years, indicating a consistent rise in expenses related to restaurant operations excluding depreciation and amortization. Although the increase is generally steady, there are periods of slower growth, such as between Q3 and Q4 2022, where costs stabilized around $1,657,000 thousand, before resuming an upward trend. This upward trajectory likely reflects expansion activities, inflationary pressures, higher input costs, or increased operational scale.

Accounts Payable

Accounts payable figures demonstrated fluctuating patterns without a clear directional trend. Beginning at $130,423 thousand in Q1 2020, the balance increased and decreased intermittently, reaching $217,406 thousand by Q1 2025. Peaks occurred around Q3 2021 ($171,712 thousand) and Q3 2023 ($207,541 thousand), suggesting possible timing differences in payments or variations in vendor credit terms. The variability in accounts payable contrasts with the steady growth in operating costs, potentially indicating changes in supplier negotiation, payment schedules, or working capital management approaches.

Payables Turnover Ratio

The payables turnover ratio, available from Q4 2020 onwards, fluctuated between approximately 32 and 43 times annually. This ratio shows no sustained trend upwards or downwards but rather oscillates, with notable highs around Q3 2023 (42.59) and lows near Q4 2021 (32.44). The variations in turnover ratio, combined with the changes in payable balances, reflect inconsistent payment speeds to suppliers, which may be influenced by operational cash flow, strategic payment policies, or seasonal factors.

Overall, the data points to a company experiencing steadily increasing operating costs accompanied by fluctuating accounts payable levels and a variable payables turnover ratio. These patterns suggest dynamic working capital management amidst expanding operational scale or changing market conditions.

Working Capital

The working capital values exhibit fluctuations over the observed quarters. From March 2020 to December 2020, there is a general upward trend, culminating in a peak around the end of 2020 at approximately $598 million. During 2021, working capital remains relatively high but shows variability, with a noticeable drop by the end of December 2021 to about $508 million. The figures then experience a decline through early 2022, hitting a low in June 2022 around $215 million. Following that, working capital recovers gradually through the remainder of 2022 and into 2023, reaching over $590 million by December 2023. Into 2024 and early 2025, the trend continues with working capital increasing, peaking at approximately $743 million by mid-2024, before slightly decreasing toward March 2025.

Revenue

Revenue displays an overall positive growth trend throughout the period. Starting from approximately $1.41 billion in March 2020, revenue sees sequential quarterly increases with some minor fluctuations. Notable upward shifts occur in 2021 and 2022, with the revenue crossing the $2 billion mark consistently. By December 2022, revenue reaches about $2.18 billion, continuing to rise in 2023, reaching $2.52 billion by December 2023. The upward trajectory persists into 2024, where revenue peaks near $2.97 billion in June 2024, with a slight decrease afterward but maintaining levels above $2.8 billion through March 2025.

Working Capital Turnover

Working capital turnover ratios, available from March 2021 onwards, reveal dynamic operational efficiency patterns. The ratio rises steadily from 10.01 in March 2021 to a notable peak at 37.95 in September 2022, reflecting a significant increase in revenue generated per unit of working capital. After this peak, the turnover ratio declines to 16.17 by June 2023, indicating a substantial decrease in the efficiency of working capital usage. Subsequent quarters show a moderate recovery and stabilization, with ratios fluctuating between approximately 14 and 20 through March 2025. This suggests that while the company experienced a period of exceptional turnover efficiency around late 2022, it later reverted to lower but stable turnover ratios.

Overall Insights

The data reveals steady revenue growth over the examined periods, highlighting consistent expansion and increased sales volumes. Working capital demonstrates significant variability, with periods of both growth and decline, suggesting active management of current assets and liabilities possibly aligned with operational needs or external conditions. The peak in working capital turnover in late 2022 suggests a brief period of enhanced capital efficiency, which was followed by a correction to more typical levels. The interplay between rising revenues and changing working capital levels indicates an evolving operational strategy aimed at balancing growth with capital utilization efficiency.

The inventory turnover ratio exhibits notable fluctuations over the observed quarters, beginning from the first available data point in March 31, 2020. Initially recorded at 186.94, the ratio demonstrates an upward trend reaching a peak of 213.29 by September 30, 2020. This is followed by a decline to 177.91 by March 31, 2022. Subsequently, the ratio rises again, achieving values above 200 in multiple quarters, with a maximum of 218.61 reported on September 30, 2024. However, there are intermittent declines, such as the drop to 161.15 on December 31, 2024, before increasing once more to 204.36 by March 31, 2025.

Throughout the entire period, the average inventory processing period remains consistently stable at 2 days, indicating a steady pace in inventory handling despite the variations observed in the turnover ratio. This consistency suggests efficient inventory management practices that are maintained regardless of the inventory turnover fluctuations.

Inventory Turnover Ratio

The ratio shows considerable volatility but generally maintains a high level, mostly fluctuating between approximately 160 and 220. Peaks and troughs appear cyclically, implying periodic changes in sales or inventory levels impacting turnover efficiency.

Average Inventory Processing Period

The duration remains unchanged over the timeframe, consistently holding at 2 days. This points to a strong and stable inventory processing system unaffected by other operational dynamics that influence turnover.

Receivables Turnover

The receivables turnover ratio exhibits noticeable fluctuations over the observed periods. Starting from a lower and incomplete data set in early 2020, a distinct increasing trend is evident from March 2021 onward. The ratio reached a peak of 152.24 in September 2023, indicating a high efficiency in collecting receivables during that quarter. Following this peak, the ratio generally maintains elevated values above 100 for most periods, with some declines observed intermittently, notably adjusting to 78.59 in March 2025. Overall, the trend suggests enhanced effectiveness in receivables turnaround compared to the initial periods, although with some periodic variability.

Average Receivable Collection Period

The average collection period demonstrates an inversely related movement to the receivables turnover ratio, as expected. Initial data from March 2021 highlights a very short collection period of around 4 to 6 days. This duration declines to a minimum of 2 to 3 days during late 2022 and parts of 2023, signaling rapid collection of outstanding receivables. Despite this, some increases occur sporadically, with collection days rising to 5 on several occasions, including the last recorded period in March 2025. The overall trend reveals consistently short receivable collection periods, enhancing liquidity and cash flow management.

Interrelationship and Insights

The inverse correlation between receivables turnover and average receivable collection period aligns with standard financial principles. Periods characterized by higher turnover ratios correspond with lower days in collection, implying efficient credit and collection policies. The variability seen in the data warrants attention to potential seasonal or operational factors influencing collections. The consistently short collection period and high turnover ratios suggest effective management of receivables contributing positively to working capital efficiency.

The data reveals consistency and minor fluctuations in inventory management and receivables collection over the period analyzed.

Average Inventory Processing Period

The inventory processing period is notably stable at 2 days throughout all the quarters presented from March 31, 2020, to March 31, 2025. This indicates a consistent and efficient inventory turnover process with no significant changes or delays observed in handling inventory.

Average Receivable Collection Period

The receivable collection period exhibits some variation but remains within a narrow range of 2 to 6 days. Initially, it stands at 6 days in March 2020, then declines to 4 days by June 2020 and fluctuates slightly thereafter. A pattern of minor decreases and occasional rises is observable, with notable lows at 2 and 3 days in multiple quarters starting mid-2022. The highest value is 6 days at the beginning of the period. This trend suggests gradual improvements in the efficiency of receivables collection, contributing to more timely cash inflows.

Operating Cycle

The operating cycle follows a similar pattern to the average receivable collection period, ranging between 4 and 8 days. Starting effectively at 8 days in early 2020, it decreases to as low as 4 days by September 2023 and generally oscillates between 5 and 7 days in other quarters. The fluctuations indicate slight variations in the combined efficiency of inventory processing and receivables, but overall, the operating cycle is relatively short and stable.

In summary, the operational efficiency regarding inventory turnover and accounts receivable management remains strong and consistent. The stable and low inventory processing period, paired with a decreasing trend in receivable collection days, contributes to an efficient and short operating cycle, which is favorable for liquidity and overall financial health.

The payables turnover ratio exhibits notable fluctuations throughout the observed periods from March 31, 2020, to March 31, 2025. Initially, from March 31, 2020, to December 31, 2020, data is unavailable. Starting in March 31, 2021, the ratio shows a declining trend from 40.52 to minimum values around 32.44 by December 31, 2021, indicating slower turnover of payables during this interval. Subsequently, the turnover ratio demonstrates variability, fluctuating between approximately 34 and 42 in the subsequent quarters through March 31, 2025. The highest recorded value within this timeframe is 42.59 on September 30, 2023, while the lowest value on record is 32.44 on December 31, 2021. Overall, the ratio remained within a range suggesting fairly consistent management of payables turnover but with periodic oscillations that may reflect operational or supplier payment dynamics.

Regarding the average payables payment period, measured in days, the values correspond inversely with the payables turnover ratio, as typically expected. The payment periods mostly range between 9 and 11 days, presenting minor variances over time. Beginning from March 31, 2021, the number of days to settle payables increased slightly from 9 to 11 days through the end of 2021, aligning with the observed reduction of the payables turnover ratio during the same timeframe. Following this period, the payment duration stabilized around 9 to 10 days, maintaining consistency through March 31, 2025, with occasional small increases back to 11 days. This relatively stable payment period indicates a consistent approach to managing payable obligations without significant deviation in payment timing.

In summary, the trends suggest consistent, though occasionally variable, management of payables. The fluctuations in payables turnover ratio and average payment period indicate periods of modest changes in payment policies or operational circumstances but generally reflect controlled and stable payables management practices across the analyzed quarters.

The analysis of the financial data focuses on the company's working capital efficiency as reflected by key metrics related to inventory, receivables, payables, and the cash conversion cycle over the observed quarters.

Average Inventory Processing Period

The average inventory processing period remains constant at 2 days from March 31, 2021, through March 31, 2025. This stability indicates consistent management and turnover of inventory without significant fluctuation over time.

Average Receivable Collection Period

The receivable collection period shows a slightly variable but generally low trend, fluctuating between 2 and 6 days. Initially, in early 2020, exact data is absent, but from March 31, 2021, values range mostly between 3 and 5 days, with the lowest period of 2 days recorded in the third quarter of 2023. This suggests efficient collection practices with minor variations quarter to quarter, implying a strong control over receivables and prompt customer payments.

Average Payables Payment Period

This period remains relatively stable with values hovering around 9 to 11 days over the duration. Starting at 9 days in March 2021, it slightly fluctuates but does not show a clear upward or downward trend. This indicates a consistent approach to managing payables, balancing between taking advantage of payment terms and maintaining good supplier relationships.

Cash Conversion Cycle

The cash conversion cycle is negative throughout the period for which data is available, ranging roughly from -1 day to -6 days. A negative cash conversion cycle suggests that the company collects cash from customers before it has to pay its suppliers, which is favorable for liquidity. The cycle shows minor fluctuations but generally stays around -3 to -5 days, indicating sustained operational efficiency in managing working capital components.

Overall, the financial data reflects stable and efficient management of working capital. Inventory turnover is consistent, receivables are collected promptly, and payables are managed prudently. The negative cash conversion cycle further underscores strong liquidity positioning, as the company effectively utilizes supplier credit to finance its operations without delay.