Dollar General Corporation (DG)

Cash conversion cycle

		Jan 31, 2025	Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Feb 2, 2024	Jan 31, 2024	Nov 3, 2023	Oct 31, 2023	Aug 4, 2023	Jul 31, 2023	May 5, 2023	Apr 30, 2023	Feb 3, 2023	Jan 31, 2023	Oct 31, 2022	Oct 28, 2022	Jul 31, 2022	Jul 29, 2022	Apr 30, 2022	Apr 29, 2022
Days of inventory on hand (DOH)	days	84.98	84.26	83.05	76.99	78.30	78.74	83.91	92.19	96.02	95.46	92.01	91.41	78.00	85.86	86.36	88.01	87.57	88.88	79.85	80.18
Days of sales outstanding (DSO)	days	—	—	—	—	1.05	—	1.86	—	1.45	—	—	—	1.26	—	—	1.86	—	0.96	—	0.36
Number of days of payables	days	—	—	—	—	40.16	—	41.66	—	46.94	—	46.15	—	40.99	—	—	50.84	—	55.85	—	51.46
Cash conversion cycle	days	84.98	84.26	83.05	76.99	39.19	78.74	44.11	92.19	50.53	95.46	45.86	91.41	38.27	85.86	86.36	39.03	87.57	33.99	79.85	29.08

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 84.98 + — – —
= 84.98

The cash conversion cycle of Dollar General Corporation has exhibited fluctuations over the past few years. It reflects the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Analyzing the data provided, we observe that the cash conversion cycle ranged from its lowest of 29.08 days in April 2022 to its highest of 95.46 days in July 2023. This fluctuation indicates potential changes in the efficiency of Dollar General's operations and management of its working capital.

It is worth noting shorter cash conversion cycles are generally preferred as they signify faster conversion of inventory into sales and then into cash. Conversely, longer cycles can indicate issues such as slow inventory turnover, extended credit terms, or delays in receiving payments from customers.

In general, Dollar General's cash conversion cycle appears to have been relatively volatile, with periods of both shorter and longer cycles. This suggests the company may need to focus on improving inventory management, optimizing payment terms, and enhancing cash flow efficiency to achieve more stable and optimal operations. Continued monitoring and analysis of the cash conversion cycle will be essential for understanding Dollar General's working capital management and overall financial health.