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