Nordstrom Inc (JWN)

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	128.93	138.21	165.74	155.00	67.88
Days of sales outstanding (DSO)	days	8.30	6.23	6.29	8.35	4.21
Number of days of payables	days	84.40	88.15	110.71	163.07	55.72
Cash conversion cycle	days	52.82	56.29	61.32	0.28	16.37

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 128.93 + 8.30 – 84.40
= 52.82

The cash conversion cycle of Nordstrom Inc has fluctuated over the past five years, indicating varying efficiency in managing its cash, inventory, and receivables.

In fiscal year 2024, the company's cash conversion cycle decreased to 52.82 days compared to the previous year, which suggests an improvement in converting inventory into cash. However, it is still higher than in FY 2020.

The significant increase in the cash conversion cycle in FY 2022 to 61.32 days could indicate challenges in managing working capital efficiently. This was followed by a substantial improvement in FY 2021 where the cycle was nearly zero, suggesting the company was able to convert cash into inventory and receivables rapidly.

Overall, the company's cash conversion cycle has shown variability, with periods of efficient working capital management and periods of challenges. This metric is crucial for assessing the company's liquidity, operational efficiency, and ability to optimize cash flow.