Helen of Troy Ltd (HELE)
Cash conversion cycle
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 81.99 | 87.82 | 87.89 | 86.12 | 88.47 | 99.23 | 115.77 | 114.19 | 103.72 | 112.06 | 115.64 | 101.46 | 95.80 | 100.74 | 102.42 | 85.78 | 82.03 | 110.90 | 126.41 | 116.20 |
| Days of sales outstanding (DSO) | days | 73.79 | 86.94 | 72.38 | 64.20 | 67.82 | 86.18 | 83.50 | 79.78 | 75.56 | 86.37 | 72.82 | 67.20 | 66.92 | 90.26 | 78.92 | 69.72 | 74.80 | 81.32 | 70.95 | 60.77 |
| Number of days of payables | days | 50.80 | 60.41 | 52.18 | 44.89 | 37.02 | 42.97 | 56.09 | 60.13 | 57.29 | 58.54 | 64.33 | 59.66 | 66.60 | 79.13 | 82.04 | 60.11 | 48.86 | 47.04 | 56.81 | 48.19 |
| Cash conversion cycle | days | 104.98 | 114.35 | 108.09 | 105.43 | 119.27 | 142.44 | 143.18 | 133.84 | 122.00 | 139.89 | 124.13 | 109.01 | 96.12 | 111.87 | 99.30 | 95.39 | 107.97 | 145.18 | 140.55 | 128.78 |
February 29, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 81.99 + 73.79 – 50.80
= 104.98
The cash conversion cycle of Helen of Troy Ltd has shown fluctuations over the recent periods, ranging from a low of 95.39 days to a high of 145.18 days. The overall trend indicates that the company takes an average of around 110 days to convert its investments in inventory into cash receipts from customers.
A shorter cash conversion cycle is generally preferable as it indicates that the company is able to efficiently manage its working capital and generate cash from its operations more quickly. On the other hand, a longer cash conversion cycle may suggest inefficiencies in managing inventory, receivables, and payables, leading to potential liquidity challenges.
Helen of Troy Ltd should closely monitor and analyze the components of the cash conversion cycle, including the days inventory outstanding, days sales outstanding, and days payable outstanding, to identify areas for improvement and optimize its working capital management. By reducing the cash conversion cycle, the company can potentially enhance its liquidity position and financial performance.