Dollar General Corporation (DG)

Cash conversion cycle

		Feb 2, 2024	Feb 3, 2023	Jan 28, 2022	Jan 29, 2021	Jan 31, 2020
Days of inventory on hand (DOH)	days	70.42	71.49	66.10	63.43	67.06
Days of sales outstanding (DSO)	days	1.07	1.32	1.04	0.99	1.01
Number of days of payables	days	36.12	37.57	44.02	43.69	41.02
Cash conversion cycle	days	35.37	35.24	23.13	20.73	27.05

February 2, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 70.42 + 1.07 – 36.12
= 35.37

The cash conversion cycle of Dollar General Corporation has shown some fluctuations over the past five years. In the most recent fiscal year ending February 2, 2024, the cash conversion cycle increased to 35.37 days from 35.24 days in the previous year, indicating a slight slowdown in the company's ability to convert its investments in inventory and accounts receivable into cash.

Comparing the current cycle to two years prior, there has been a noticeable increase from 23.13 days ending January 28, 2022. This suggests that Dollar General may be taking longer to sell its inventory and collect on its sales, which could potentially impact its liquidity and working capital management.

However, when compared to three years ago, the cash conversion cycle has increased significantly from 20.73 days ending January 29, 2021, indicating a longer operating cycle. It appears that Dollar General may be facing challenges in efficiently managing its cash flow and working capital in recent years.

Moreover, the cycle has also increased from 27.05 days ending January 31, 2020, showing a continuing trend of a lengthier cash conversion cycle, which could potentially strain the company's cash resources and overall financial health.

Overall, Dollar General Corporation's cash conversion cycle has exhibited fluctuations and a general upward trend over the past five years, indicating potential challenges in inventory management and accounts receivable collection that may require closer attention and improvement to enhance the company's overall financial performance.