GameStop Corp (GME)
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 | 58.03 | 54.72 | 71.62 | 57.41 | 68.85 |
| Days of sales outstanding (DSO) | days | 6.30 | 9.48 | 8.57 | 7.55 | 8.01 |
| Number of days of payables | days | 29.72 | 42.57 | 36.87 | 32.57 | 30.50 |
| Cash conversion cycle | days | 34.60 | 21.62 | 43.32 | 32.39 | 46.37 |
February 3, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 58.03 + 6.30 – 29.72
= 34.60
The cash conversion cycle for GameStop Corp has shown fluctuations over the past five years.
In Jan 2020, the company had a relatively long cash conversion cycle of 46.37 days, indicating that it took GameStop 46.37 days on average to convert its investments in inventory back into cash from sales. This suggests a potential inefficiency in managing its inventory, sales, and collections.
Over the following two years, the cash conversion cycle decreased to 32.39 days in Jan 2021, signifying an improvement in GameStop's efficiency in managing its working capital. However, in Jan 2022, the cycle increased significantly to 43.32 days, indicating a potential dip in operational efficiency and a longer period for the company to convert its resources into cash.
In the most recent year (Feb 2023), GameStop managed to further reduce its cash conversion cycle to 21.62 days, indicating a significant improvement in managing its working capital, possibly through better inventory management, quicker sales cycles, or more efficient collection of receivables.
Overall, GameStop's cash conversion cycle has shown fluctuations, but the recent trend suggests an improvement in the efficiency of its operations in converting investments in inventory into cash. Monitoring this metric will be crucial for assessing the company's operational efficiency and financial health.