Dollar Tree Inc (DLTR)
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 | 92.78 | 108.09 | 89.71 | 74.14 | 77.58 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 35.38 | 35.73 | 36.98 | 30.49 | 29.44 |
| Cash conversion cycle | days | 57.40 | 72.36 | 52.73 | 43.65 | 48.14 |
February 3, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.78 + — – 35.38
= 57.40
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory back into cash received from sales. A shorter cycle indicates more efficient management of working capital.
Over the past five years, Dollar Tree Inc's cash conversion cycle has varied. Starting from 48.14 days in February 2020, it increased to 72.36 days in January 2023, then decreased to 52.73 days in January 2022, before increasing again to 57.40 days in February 2024.
The company's cash conversion cycle has shown some fluctuation, with the cycle being longer in the recent years, which could be attributed to factors such as changes in inventory management, sales trends, or payment terms with suppliers and customers. Careful monitoring of this metric can provide insights into the company's liquidity and operational efficiency.
Peer comparison
Feb 3, 2024