Chewy Inc (CHWY)
Cash conversion cycle
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 25.16 | 26.33 | 24.52 | 27.87 | 24.83 |
| Days of sales outstanding (DSO) | days | 5.05 | 4.57 | 5.17 | 6.26 | 6.11 |
| Number of days of payables | days | 38.66 | 40.04 | 38.64 | 42.26 | 53.36 |
| Cash conversion cycle | days | -8.45 | -9.14 | -8.95 | -8.13 | -22.42 |
January 28, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 25.16 + 5.05 – 38.66
= -8.45
The cash conversion cycle for Chewy Inc has shown a consistent improvement over the past five years. The company's cash conversion cycle measures the time it takes for Chewy to convert its resource inputs into cash flows from sales.
From January 28, 2020, to January 28, 2024, Chewy Inc's cash conversion cycle has improved from -22.42 days to -8.45 days, indicating a positive trend in the efficiency of its working capital management. This improvement suggests that Chewy has been able to streamline its operations and manage its working capital more effectively over the years.
A negative cash conversion cycle value indicates that Chewy is able to collect cash from its customers before paying its suppliers, which is advantageous as it allows the company to operate with a negative working capital. This means Chewy can finance its operations using funds collected from customers before needing to pay its suppliers, leading to potential cost savings and improved cash flow management.
Overall, the consistent trend of improvement in Chewy Inc's cash conversion cycle over the past five years is a positive indicator of the company's operational efficiency and working capital management practices.
Peer comparison
Jan 28, 2024