American Eagle Outfitters Inc (AEO)

Cash conversion cycle

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019	Feb 2, 2019
Days of inventory on hand (DOH)	days	44.94	56.21	46.76	45.22	42.57	57.64	50.36	51.85	39.20	59.35	42.38	35.48	47.82	35.69	35.34	38.02	60.38	50.76	44.08	44.80
Days of sales outstanding (DSO)	days	17.20	17.00	19.50	18.85	18.46	18.53	16.20	16.72	20.54	17.40	12.88	15.47	12.02	10.26	9.81	10.09	9.67	8.62	6.57	8.45
Number of days of payables	days	18.82	21.92	17.52	15.37	17.05	13.62	14.56	17.97	16.42	25.23	18.64	22.40	26.01	25.02	14.84	24.35	34.20	30.09	22.39	25.41
Cash conversion cycle	days	43.32	51.29	48.74	48.71	43.98	62.55	52.00	50.60	43.33	51.51	36.62	28.56	33.84	20.92	30.30	23.76	35.85	29.29	28.26	27.85

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.94 + 17.20 – 18.82
= 43.32

The cash conversion cycle of American Eagle Outfitters Inc, a retail company, has shown fluctuations over the past several quarters. The cash conversion cycle represents the time it takes for a company to convert its inventory into cash received from sales.

In the most recent period ending February 3, 2024, the cash conversion cycle was 43.32 days. This indicates that, on average, it took American Eagle Outfitters approximately 43.32 days to sell its inventory and collect cash from customers.

Looking at the trend over the past few quarters, we see variations in the cash conversion cycle. For example, in the previous quarter ending October 28, 2023, the cycle was 51.29 days, showing an increase from the current period. Similarly, in the quarter ending July 29, 2023, the cycle was 48.74 days.

Furthermore, comparing the current period to historical data, we observe fluctuations in the cash conversion cycle. For instance, in the quarter ending January 28, 2023, the cycle was 43.98 days, similar to the most recent period. However, there were periods like October 29, 2022, where the cycle was 62.55 days, indicating a longer time to convert inventory to cash.

Overall, the analysis of American Eagle Outfitters Inc's cash conversion cycle suggests that the company has experienced variability in the efficiency of its working capital management. It is essential for the company to monitor and optimize its inventory turnover, accounts receivable collection, and accounts payable payment processes to improve its cash conversion cycle and overall financial performance.