Nordstrom Inc (JWN)

Cash conversion cycle

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Days of inventory on hand (DOH)	days	128.95	182.33	134.21	148.75	139.87	197.90	166.00	172.21	165.71	221.63	178.45	173.10	155.00	110.95	70.36	58.26	67.88	90.21	68.00	69.89
Days of sales outstanding (DSO)	days	8.30	8.05	6.06	6.73	6.23	6.70	6.94	7.06	6.29	7.14	8.63	7.49	8.35	8.05	4.37	3.96	4.21	5.52	4.95	5.40
Number of days of payables	days	84.42	131.23	97.25	111.32	89.21	142.55	120.88	134.73	110.69	178.82	160.38	147.94	163.07	122.46	62.30	44.02	55.72	76.23	64.02	56.41
Cash conversion cycle	days	52.83	59.16	43.02	44.16	56.89	62.05	52.05	44.54	61.31	49.95	26.71	32.64	0.28	-3.46	12.43	18.20	16.37	19.50	8.93	18.89

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 128.95 + 8.30 – 84.42
= 52.83

The Cash Conversion Cycle (CCC) is a vital measure for evaluating the efficiency with which Nordstrom Inc manages its working capital. The CCC indicates the time it takes for the company to convert its resources (raw materials, inventory) into cash collected from customers. A shorter CCC suggests improved efficiency in managing working capital.

From the data provided, it is evident that Nordstrom Inc's CCC has varied over the analyzed periods. The company had a positive CCC for most of the periods, with varying lengths. For instance, the CCC was highest at 62.05 days in October 29, 2022, and lowest at -3.46 days in October 31, 2020. During the period when the CCC was negative, it indicates that Nordstrom Inc was utilizing its suppliers' financing to drive its cash conversion.

The CCC trend shows fluctuations, which can be attributed to the company's inventory management, accounts receivable collection policies, and payment practices with suppliers. A consistent effort to optimize these factors can lead to a shorter CCC, enhancing the company's liquidity position and overall financial health.

Analysts should closely monitor the CCC trend to assess Nordstrom Inc's working capital management efficiency and its ability to convert investments in inventory and accounts receivable into cash. Any significant deviations in the CCC should be further investigated to identify potential operational or financial challenges faced by the company.