Best Buy Co. Inc (BBY)
Cash conversion cycle
| Feb 1, 2025 | Nov 2, 2024 | Aug 3, 2024 | May 4, 2024 | 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 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 57.74 | 86.98 | 63.01 | 57.25 | 53.46 | 81.18 | 59.39 | 53.80 | 51.56 | 70.73 | 57.30 | 57.84 | 54.27 | 77.15 | 57.96 | 53.52 | 55.83 | 77.22 | 44.93 | 43.88 |
| Days of sales outstanding (DSO) | days | 9.18 | 8.06 | 7.47 | 6.56 | 7.89 | 7.55 | 7.04 | 6.96 | 9.00 | 8.00 | 6.23 | 5.78 | 7.35 | 7.09 | 6.17 | 6.16 | 8.19 | 8.24 | 7.61 | 6.35 |
| Number of days of payables | days | 56.55 | 79.61 | 61.20 | 51.10 | 50.00 | 76.58 | 57.50 | 50.24 | 57.05 | 68.42 | 51.26 | 50.76 | 61.89 | 75.82 | 62.73 | 59.50 | 69.43 | 94.31 | 71.84 | 48.66 |
| Cash conversion cycle | days | 10.37 | 15.42 | 9.28 | 12.71 | 11.35 | 12.16 | 8.93 | 10.51 | 3.51 | 10.30 | 12.26 | 12.86 | -0.28 | 8.42 | 1.39 | 0.19 | -5.41 | -8.85 | -19.29 | 1.57 |
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 shown fluctuations over the past few years, indicating changes in the company's efficiency in managing its cash flow and operating cycle.
From May 2, 2020, to August 1, 2020, the company experienced a significant improvement in its cash conversion cycle, with the number of days reducing from 1.57 days to -19.29 days. A negative cash conversion cycle suggests that Best Buy was able to collect cash from customers before paying its suppliers, leading to improved liquidity and potentially lower financing costs.
However, the cash conversion cycle fluctuated over subsequent periods, showing both positive and negative values. This indicates variations in the company's ability to manage its working capital effectively. By January 29, 2022, the cash conversion cycle turned negative again but later increased to 12.86 days by April 30, 2022, and further increased to 15.42 days by November 2, 2024.
The rising trend in the cash conversion cycle in recent periods may suggest that Best Buy is taking longer to convert its investment in inventory back into cash, leading to potential liquidity challenges or increased carrying costs. It is essential for the company to closely monitor and manage its cash conversion cycle to ensure optimal use of resources and maintain financial health.