AutoZone Inc (AZO)
Cash conversion cycle
| Feb 10, 2024 | Nov 18, 2023 | Aug 26, 2023 | May 6, 2023 | Feb 11, 2023 | Nov 19, 2022 | Aug 27, 2022 | May 7, 2022 | Feb 12, 2022 | Nov 20, 2021 | Aug 28, 2021 | May 8, 2021 | Feb 13, 2021 | Nov 21, 2020 | Aug 29, 2020 | May 9, 2020 | Nov 23, 2019 | Aug 31, 2019 | May 4, 2019 | Feb 9, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 259.69 | 251.74 | 250.86 | — | — | — | 264.52 | — | — | 242.50 | 245.02 | — | — | 272.82 | 248.45 | — | 292.65 | 286.70 | — | — |
| Days of sales outstanding (DSO) | days | 10.26 | 10.58 | 10.88 | — | — | — | 11.34 | — | — | — | 9.44 | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | 311.01 | 313.14 | 313.41 | 317.76 | 325.79 | 334.06 | 342.56 | 329.17 | 314.20 | 313.86 | 317.58 | 314.82 | 312.42 | 311.36 | 286.39 | 306.18 | 322.75 | 322.93 | 323.72 | 325.40 |
| Cash conversion cycle | days | -41.06 | -50.82 | -51.67 | -317.76 | -325.79 | -334.06 | -66.70 | -329.17 | -314.20 | -71.36 | -63.12 | -314.82 | -312.42 | -38.55 | -37.94 | -306.18 | -30.10 | -36.23 | -323.72 | -325.40 |
February 10, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 259.69 + 10.26 – 311.01
= -41.06
The cash conversion cycle of AutoZone Inc has displayed significant fluctuations over the periods indicated. The company's cash conversion cycle measures how long it takes for AutoZone to convert its investments in inventory and accounts receivable into cash flow from sales. A negative cash conversion cycle, as seen in most of the data points, indicates that AutoZone is efficiently managing its cash flow by collecting payments from customers and liquidating inventory before paying suppliers.
The company experienced its most extreme negative cash conversion cycle of -334.06 days in November 2022, suggesting that AutoZone was particularly effective at managing its working capital during that period. However, this was followed by a substantial increase in the cycle to -317.76 days in May 2023, which may indicate challenges in operational efficiency or changes in the working capital management practices of the company.
Overall, while the negative cash conversion cycles indicate strong working capital management by AutoZone, it is essential for the company to closely monitor fluctuations in the cycle to ensure efficient cash flow operations and sustainable financial performance.
Peer comparison
Feb 10, 2024