Home Depot Inc (HD)

Cash conversion cycle

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Nov 3, 2019	Aug 4, 2019	May 5, 2019
Days of inventory on hand (DOH)	days	75.28	81.34	82.43	89.42	86.82	89.77	92.28	91.12	80.29	76.74	72.10	74.96	69.55	71.15	62.66	74.01	73.00	78.48	74.33	78.47
Days of sales outstanding (DSO)	days	7.96	9.34	9.04	9.87	7.69	8.66	8.76	—	8.27	8.73	—	—	8.27	—	—	—	—	—	—	—
Number of days of payables	days	36.02	40.94	42.89	44.51	39.92	43.29	50.75	55.35	48.98	49.87	48.87	56.65	48.55	56.81	54.27	49.65	39.12	46.16	47.87	52.22
Cash conversion cycle	days	47.21	49.74	48.59	54.78	54.59	55.14	50.29	35.77	39.58	35.60	23.23	18.31	29.27	14.34	8.39	24.36	33.88	32.32	26.46	26.25

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 exhibited fluctuations over the given periods. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales.

Observing the data, it is evident that there have been variations in the cash conversion cycle ranging from 8.39 days to 55.14 days. A lower cash conversion cycle indicates that the company is efficiently managing its working capital, while a higher cycle may imply inefficiencies in the management of inventory and receivables.

The trend in Home Depot Inc's cash conversion cycle shows that there have been periods of shorter cycles, such as in August 2021 and May 2020, indicating effective working capital management during these times. Conversely, longer cycles, as seen in October 2022 and April 2023, suggest potential challenges in converting inventory into sales and accounts receivable into cash.

Overall, analyzing the cash conversion cycle for Home Depot Inc can provide insights into the company's operational efficiency, inventory management, and receivables collection processes over the different reporting periods.