American Eagle Outfitters Inc (AEO)

Cash conversion cycle

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Days of inventory on hand (DOH)	days	44.89	42.57	43.27	35.74	38.04
Days of sales outstanding (DSO)	days	17.20	18.46	21.60	15.47	10.09
Number of days of payables	days	18.80	17.05	18.12	22.56	24.35
Cash conversion cycle	days	43.29	43.98	46.75	28.65	23.77

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.89 + 17.20 – 18.80
= 43.29

The cash conversion cycle of American Eagle Outfitters Inc has exhibited fluctuations over the past five years, ranging from 23.77 days in February 2020 to 46.75 days in January 2022. The company's efficiency in converting its resources and investments into cash has shown some variability. In the latest period, ending February 3, 2024, the cash conversion cycle stands at 43.29 days. This implies that it takes the company on average 43.29 days to convert its investments in inventory into cash received from sales, taking into account the time it takes to sell inventory, collect receivables, and pay suppliers. It is essential for American Eagle Outfitters Inc to effectively manage its cash conversion cycle to optimize its working capital and maintain healthy liquidity levels.