Kroger Company (KR)

Cash conversion cycle

Feb 3, 2024 Nov 4, 2023 Aug 12, 2023 May 20, 2023 Jan 28, 2023 Nov 5, 2022 Aug 13, 2022 May 21, 2022 Jan 29, 2022 Nov 6, 2021 Aug 14, 2021 May 22, 2021 Jan 30, 2021 Nov 7, 2020 May 23, 2020 Feb 1, 2020 Nov 9, 2019 Aug 17, 2019 May 25, 2019 Feb 2, 2019
Days of inventory on hand (DOH) days 21.99 32.83 28.14 28.67 30.88 24.02 22.75 22.46 25.64 23.49 109.44
Days of sales outstanding (DSO) days 5.21 4.80 4.50 4.35 5.52 5.05 4.75 4.90 4.86 5.17 5.39 4.95 4.99 4.61 4.50 5.12 4.82 4.74 4.73 4.80
Number of days of payables days 32.12 33.74 31.31 29.99 29.08 23.87 24.25
Cash conversion cycle days -4.93 3.90 1.33 3.03 7.32 5.05 4.75 28.91 3.74 5.17 5.39 27.41 6.38 4.61 27.99 5.12 4.82 4.74 114.17 4.80

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 metric that reflects how efficiently a company manages its working capital. It measures the time it takes for a company to convert its investment in inventory into cash from sales.

Analyzing Kroger Company's cash conversion cycle over the past several reporting periods reveals fluctuations in the efficiency of its working capital management.

In the most recent period, Kroger had a negative cash conversion cycle of -4.93 days, indicating that the company is able to collect cash from its sales before paying its suppliers and incurring additional costs for inventory. This suggests efficient working capital management, as Kroger is able to operate with a short cash conversion cycle.

However, in previous periods there has been variation in Kroger's cash conversion cycle. For example, in some periods, such as May 25, 2019, the cash conversion cycle was significantly longer at 114.17 days, indicating that Kroger took longer to convert inventory into cash. This prolonged cycle could be a result of issues such as slow collections from customers or excess inventory levels.

Overall, Kroger's management should continue to focus on optimizing the cash conversion cycle by streamlining its operations, improving inventory turnover, and managing receivables effectively to enhance overall working capital efficiency.


Peer comparison

Feb 3, 2024

Company name
Symbol
Cash conversion cycle
Kroger Company
KR
-4.93
Grocery Outlet Holding Corp
GO
16.07
Sprouts Farmers Market LLC
SFM
10.44