Kroger Company (KR)
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 | 21.99 | 23.41 | 22.75 | 25.10 | 26.79 |
| Days of sales outstanding (DSO) | days | 5.21 | 5.52 | 4.86 | 4.93 | 5.12 |
| Number of days of payables | days | 32.12 | 22.04 | 23.87 | 23.74 | 24.01 |
| Cash conversion cycle | days | -4.93 | 6.89 | 3.74 | 6.29 | 7.90 |
February 3, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 21.99 + 5.21 – 32.12
= -4.93
The cash conversion cycle is a key indicator of the efficiency with which Kroger Company manages its working capital. The trend analysis of Kroger's cash conversion cycle over the past five years reveals fluctuations in the company's ability to convert its resources into cash.
In the most recent fiscal year ending on February 3, 2024, Kroger exhibited a negative cash conversion cycle of -4.93 days, indicating that the company converted its resources into cash at a faster rate than it paid off its liabilities, which is a favorable sign for liquidity and efficiency. This suggests that Kroger may be managing its inventory levels effectively and efficiently collecting receivables, allowing it to operate with a negative cash conversion cycle.
However, in the prior year ending on January 28, 2023, Kroger experienced an increase in its cash conversion cycle to 6.89 days, which suggests that the company took longer to convert its resources into cash and may have faced challenges in managing its working capital efficiently.
Looking further back, in the fiscal year ending on January 29, 2022, Kroger's cash conversion cycle improved to 3.74 days, indicating a positive trend in the company's working capital management. In the preceding years, the cash conversion cycle was 6.29 days as of January 30, 2021, and 7.90 days as of February 1, 2020, both of which were longer periods compared to the more recent data.
Overall, Kroger's cash conversion cycle has fluctuated over the past five years, with some periods showing better efficiency in working capital management than others. It is crucial for Kroger to continue monitoring and optimizing its cash conversion cycle to ensure the effective utilization of its resources and maintain strong liquidity position in the future.
Peer comparison
Feb 3, 2024