Best Buy Co. Inc (BBY)
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 | 53.46 | 51.56 | 54.27 | 55.83 | 56.22 |
| Days of sales outstanding (DSO) | days | 7.89 | 9.00 | 7.35 | 8.19 | 9.61 |
| Number of days of payables | days | 50.00 | 57.05 | 61.89 | 69.43 | 57.46 |
| Cash conversion cycle | days | 11.35 | 3.51 | -0.28 | -5.41 | 8.37 |
February 3, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 53.46 + 7.89 – 50.00
= 11.35
The cash conversion cycle of Best Buy Co. Inc has shown varying trends over the past five years. In the most recent fiscal year, ending on February 3, 2024, the company's cash conversion cycle stood at 11.35 days, indicating that it took approximately 11.35 days to convert its investments in inventory and other resources into cash from sales.
Compared to the previous year, the cash conversion cycle has significantly increased, from 3.51 days to 11.35 days. This indicates a potential slowdown in the company's ability to efficiently manage its working capital and convert resources into cash.
Looking further back, in January 2022, Best Buy Co. Inc had a negative cash conversion cycle of -0.28 days, implying that the company was able to quickly convert resources into cash, potentially due to efficient inventory and accounts receivable management. Similarly, in January 2021, the company had a negative cash conversion cycle of -5.41 days, further highlighting its strong working capital efficiency.
However, in February 2020, the company's cash conversion cycle increased to 8.37 days, indicating a lengthening period to convert investments into cash compared to the previous two years.
Overall, the analysis of Best Buy Co. Inc's cash conversion cycle reveals fluctuations in its working capital management efficiency over the past five years, with notable variations year on year. This suggests potential changes in the company's inventory and accounts receivable management practices, impacting its ability to efficiently convert resources into cash. In the most recent fiscal year, the increase in the cash conversion cycle may warrant further investigation into the company's working capital management strategies.