Home Depot Inc (HD)

Cash conversion cycle

		Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020
Days of inventory on hand (DOH)	days	75.28	86.82	80.29	69.55	73.00
Days of sales outstanding (DSO)	days	7.96	7.69	8.27	8.27	6.97
Number of days of payables	days	36.02	39.92	48.98	48.55	39.12
Cash conversion cycle	days	47.21	54.59	39.58	29.27	40.85

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 75.28 + 7.96 – 36.02
= 47.21

The cash conversion cycle for Home Depot Inc has fluctuated over the past five years. In the most recent fiscal year ending January 28, 2024, the company's cash conversion cycle was 47.21 days, indicating a decrease from the prior year. This suggests that Home Depot was able to convert its investments in inventory and receivables into cash more efficiently, potentially due to improved inventory management or quicker collection of receivables.

Comparing the latest data to five years ago, there has been an overall increase in the cash conversion cycle, indicating that Home Depot may be taking longer to convert its resources into cash. However, it is important to note that the company's cash conversion cycle can be influenced by various factors such as changes in sales patterns, inventory turnover, and credit terms with customers.

Overall, despite some fluctuations from year to year, Home Depot Inc has generally maintained a reasonable cash conversion cycle, reflecting its ability to manage its working capital effectively and generate cash flow from its operations.