Dollar Tree Inc (DLTR)

Cash conversion cycle

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Days of inventory on hand (DOH)	days	92.78	96.96	94.95	93.57	108.09	108.58	105.25	94.00	89.71	86.24	74.93	74.14	74.14	72.13	58.83	54.47	57.48	86.94	78.86	77.13
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	35.38	32.65	31.65	29.24	35.73	35.78	39.04	35.13	36.98	39.66	31.86	31.28	30.49	30.19	26.60	22.77	21.81	32.98	33.07	27.52
Cash conversion cycle	days	57.40	64.31	63.30	64.33	72.36	72.81	66.21	58.88	52.73	46.58	43.07	42.86	43.65	41.94	32.23	31.70	35.67	53.96	45.79	49.61

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.78 + — – 35.38
= 57.40

The cash conversion cycle for Dollar Tree Inc has fluctuated over the past few periods. The company's cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

The trend observed in the cash conversion cycle shows that it has generally decreased from a high of 72.81 days on October 29, 2022, to a low of 31.70 days on August 1, 2020, before slightly increasing to 57.40 days on February 3, 2024.

A shorter cash conversion cycle is typically seen as favorable as it indicates that the company is able to quickly convert its investments into cash. This can result in improved liquidity and operational efficiency. Conversely, a longer cash conversion cycle may signal inefficiencies in managing inventory, collecting receivables, or paying off payables.

Overall, Dollar Tree Inc should continue to monitor and manage its cash conversion cycle to ensure optimal operational efficiency and liquidity.