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.
Peer comparison
Feb 3, 2024