Guess? Inc. (GES)

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	67.68	82.65	82.04	78.65	76.38	97.26	101.44	105.68	118.65	129.05	116.78	117.11	120.43	109.47	111.94	93.41	86.32	112.30	104.67	104.06
Days of sales outstanding (DSO)	days	41.92	46.92	44.09	39.94	47.20	43.80	41.17	40.49	46.32	48.06	46.26	52.33	61.10	52.97	42.50	36.40	44.61	40.99	40.17	34.83
Number of days of payables	days	39.60	42.98	45.67	40.85	43.27	54.67	64.58	62.91	83.62	83.92	77.51	74.61	92.97	81.61	69.32	51.15	51.11	54.78	53.28	44.98
Cash conversion cycle	days	70.00	86.59	80.46	77.75	80.31	86.39	78.03	83.26	81.35	93.20	85.54	94.83	88.56	80.82	85.11	78.66	79.82	98.51	91.56	93.90

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 67.68 + 41.92 – 39.60
= 70.00

The cash conversion cycle of Guess? Inc. has fluctuated over the past few reporting periods, indicating varying efficiency in managing its working capital. The cycle represents the time taken for the company to convert its investments in inventory and accounts receivable into cash inflows from sales.

The average cash conversion cycle over the reported periods is approximately 83.44 days. This indicates that, on average, it takes Guess? Inc. about 83 days to convert its investments in inventory and accounts receivable into cash receipts from customers.

A lower cash conversion cycle is generally preferred as it suggests that the company is able to effectively manage its working capital and generate cash flows quickly. On the other hand, a higher cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or a longer payment period for creditors.

It would be essential for Guess? Inc. to analyze the underlying factors contributing to the fluctuations in its cash conversion cycle and take appropriate steps to optimize its working capital management. This could involve strategies such as improving inventory turnover, enhancing accounts receivable collection processes, and negotiating better payment terms with suppliers to shorten the cash conversion cycle and improve overall liquidity and financial performance.