AutoZone Inc (AZO)
Cash conversion cycle
| Aug 31, 2024 | May 4, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 259.03 | 266.93 | 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 | 10.77 | 11.91 | 10.26 | 10.58 | 10.88 | — | — | — | 11.34 | — | — | — | 9.44 | — | — | — | — | — | — | — |
| Number of days of payables | days | 309.55 | 319.60 | 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 |
| Cash conversion cycle | days | -39.75 | -40.75 | -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 |
August 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 259.03 + 10.77 – 309.55
= -39.75
The cash conversion cycle of AutoZone Inc fluctuated over the past years, ranging from -334.06 days to -30.10 days. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, with funds being collected from customers faster than the time it takes to pay suppliers.
The company's most recent cash conversion cycle was -39.75 days as of August 31, 2024, which suggests that AutoZone is able to quickly convert its inventory into sales and then collect payment from customers. This efficiency in managing its cash flow can be attributed to effective inventory management practices and strong accounts receivable collection processes.
It's worth noting a significant deviation in the cash conversion cycle during the quarter ending May 6, 2023, where it dropped to -317.76 days. Such a large negative value could be a result of unusual circumstances, such as a temporary increase in sales or a delay in paying suppliers.
Overall, the trend of consistently maintaining a negative cash conversion cycle indicates that AutoZone Inc has been successful in optimizing its working capital management, ensuring liquidity and operational efficiency within its business operations.
Peer comparison
Aug 31, 2024