BJs Wholesale Club Holdings Inc (BJ)

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	32.53	31.68	33.39	35.34	36.67
Days of sales outstanding (DSO)	days	4.30	4.54	3.82	4.09	5.71
Number of days of payables	days	26.45	27.48	29.89	28.97	26.67
Cash conversion cycle	days	10.38	8.74	7.32	10.47	15.72

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 32.53 + 4.30 – 26.45
= 10.38

The cash conversion cycle of BJs Wholesale Club Holdings Inc has shown a fluctuating trend over the past five fiscal years. In the most recent fiscal year ending February 3, 2024, the cash conversion cycle was 10.38 days, representing an increase from the previous year's cycle of 8.74 days. Despite this increase, the current cycle is still lower than the cycle observed in the fiscal years ending Jan 30, 2021 and Feb 1, 2020, which were 10.47 days and 15.72 days respectively.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales. A shorter cash conversion cycle indicates a more efficient management of working capital, as the company can quickly convert its inventory into cash receipts. Therefore, a declining trend in the cash conversion cycle can be seen as positive for BJs Wholesale Club Holdings Inc, as it signifies improved efficiency in managing their working capital and generating cash flows from sales.