Best Buy Co. Inc (BBY)
Cash conversion cycle
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.74 | 53.46 | 51.56 | 54.27 | 55.83 |
| Days of sales outstanding (DSO) | days | 9.18 | 7.89 | 9.00 | 7.35 | 8.19 |
| Number of days of payables | days | 56.55 | 50.00 | 57.05 | 61.89 | 69.43 |
| Cash conversion cycle | days | 10.37 | 11.35 | 3.51 | -0.28 | -5.41 |
February 1, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 57.74 + 9.18 – 56.55
= 10.37
The cash conversion cycle for Best Buy Co. Inc has been fluctuating over the years based on the provided data. As of January 30, 2021, the company had a negative cash conversion cycle of -5.41 days, indicating that it was efficient in converting its inventory and accounts receivable into cash. However, this trend changed as of January 29, 2022, when the cash conversion cycle further improved to -0.28 days, suggesting an even more efficient cash conversion process.
Subsequently, there was an evident shift in the cash conversion cycle as of January 28, 2023, which increased to 3.51 days. This increase indicates that Best Buy Co. Inc took slightly longer to convert its inventory and accounts receivable into cash compared to the previous periods.
Moreover, the cash conversion cycle continued to increase significantly by February 3, 2024, reaching 11.35 days, and further increased to 10.37 days by February 1, 2025. These increments suggest that the company faced challenges in liquidity management and experienced delays in converting its working capital into cash during these periods.
In conclusion, the cash conversion cycle of Best Buy Co. Inc has displayed fluctuations over the years, with periods of high efficiency followed by challenges in cash conversion. It is essential for the company to closely monitor and manage its working capital effectively to ensure optimal cash flow and liquidity in the future.