Five Below Inc (FIVE)

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	66.85	67.64	64.54	54.44	69.83
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	29.30	28.34	27.86	26.83	28.07
Cash conversion cycle	days	37.55	39.30	36.68	27.61	41.76

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.85 + — – 29.30
= 37.55

The cash conversion cycle of Five Below Inc has fluctuated over the past five years. In general, a shorter cash conversion cycle is preferred as it indicates that the company is able to convert its investments in inventory and receivables into cash more quickly.

In 2024, the cash conversion cycle improved to 37.55 days compared to the previous year, Jan 28, 2023, when it was 39.30 days. This indicates a more efficient management of inventory and receivables. However, the cycle in 2024 was slightly longer compared to Jan 30, 2021, when it was 27.61 days, which was the lowest in the past five years.

In 2020, the cash conversion cycle was at its highest at 41.76 days, indicating a longer time taken to convert inventory and receivables into cash. The cycle has shown some variability over the years, signifying fluctuations in the efficiency of the company's working capital management.

Overall, the trend in the cash conversion cycle for Five Below Inc suggests a need for continuous monitoring and improvements in managing inventory and receivables to optimize cash flow and operational efficiency. Further analysis of the company's working capital components would provide deeper insights into its financial health and operational performance.