Guess? Inc. (GES)
Cash conversion cycle
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 121.21 | 67.68 | 109.53 | 121.20 | 76.38 |
| Days of sales outstanding (DSO) | days | — | 41.79 | — | — | 47.26 |
| Number of days of payables | days | — | 39.60 | — | — | 43.27 |
| Cash conversion cycle | days | 121.21 | 69.87 | 109.53 | 121.20 | 80.37 |
January 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 121.21 + — – —
= 121.21
Based on the provided data, Guess? Inc.'s cash conversion cycle has fluctuated over the years. On January 28, 2023, the cash conversion cycle was 80.37 days, indicating the company took approximately 80 days to convert its investments in inventory and other resources into cash flows from sales. However, by January 31, 2023, the cash conversion cycle increased significantly to 121.20 days, suggesting a longer time to convert resources into cash.
In the subsequent years, Guess? Inc. managed to reduce its cash conversion cycle. By January 31, 2024, the cycle decreased to 109.53 days, showing an improvement in efficiency. This trend continued, with a further decrease to 69.87 days by February 3, 2024, indicating faster conversion of resources into cash.
Surprisingly, by January 31, 2025, the cash conversion cycle spiked back up to 121.21 days, surpassing the initial high observed in January 31, 2023. This suggests that Guess? Inc. might be facing challenges in managing its working capital efficiently, leading to a longer cash conversion cycle.
In conclusion, the fluctuating nature of Guess? Inc.'s cash conversion cycle over the years indicates varying levels of operational efficiency and working capital management within the company. Continuous monitoring and improvement in this metric are essential to ensure optimal cash flow management and overall financial health.