Best Buy Co. Inc (BBY)
Cash conversion cycle
| 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 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 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 | 56.22 | 83.35 | 57.59 | 57.62 |
| Days of sales outstanding (DSO) | days | 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 | 9.61 | 8.91 | 8.19 | 7.09 |
| Number of days of payables | days | 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 | 57.46 | 79.64 | 55.78 | 52.33 |
| Cash conversion cycle | days | 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 | 8.37 | 12.62 | 9.99 | 12.38 |
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 fluctuated over the periods analyzed. It represents the time taken to convert company resources into cash flows. A positive cash conversion cycle indicates that a company takes longer to convert investments in inventory and other resources into cash, while a negative cycle suggests that a company is able to quickly convert investments into cash.
In the latest period, the cash conversion cycle was 11.35 days, indicating that Best Buy took approximately 11.35 days to convert its investments into cash flows. This shows an improvement compared to the previous period where the cycle was 12.16 days. It suggests that the company managed its inventory more efficiently in the latest period.
The company experienced negative cash conversion cycles in some previous periods, particularly in January 2022 and May 2021, which indicates that during those periods, Best Buy was able to quickly convert its investments into cash.
Overall, the trend in Best Buy's cash conversion cycle reflects variability in how efficiently the company manages its working capital, particularly inventory and accounts receivable. It is essential for the company to closely monitor and manage its cash conversion cycle to ensure optimal working capital management and liquidity.