Lowe's Companies Inc (LOW)

Cash conversion cycle

		Jan 31, 2025	Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Feb 2, 2024	Jan 31, 2024	Nov 3, 2023	Oct 31, 2023	Aug 4, 2023	Jul 31, 2023	Apr 30, 2023	Feb 3, 2023	Jan 31, 2023	Oct 31, 2022	Oct 28, 2022	Jul 31, 2022	Jul 29, 2022	Apr 30, 2022	Apr 29, 2022	Jan 31, 2022
Days of inventory on hand (DOH)	days	113.02	105.66	101.90	106.58	100.61	94.22	92.76	96.91	84.51	91.67	104.06	86.41	91.08	87.86	87.45	89.93	95.38	105.21	104.86	91.51
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	—	—	—	—	51.84	—	52.46	—	50.12	—	—	49.07	—	—	54.05	—	62.33	—	71.66	—
Cash conversion cycle	days	113.02	105.66	101.90	106.58	48.78	94.22	40.30	96.91	34.39	91.67	104.06	37.34	91.08	87.86	33.40	89.93	33.05	105.21	33.20	91.51

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 113.02 + — – —
= 113.02

The cash conversion cycle of Lowe's Companies Inc has shown fluctuations over the periods ranging from 2022 to 2025. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From the data provided, we observe that the cash conversion cycle varied between approximately 33 to 105 days during the specified periods. A lower cash conversion cycle indicates that the company is able to efficiently manage its cash flows, inventory, and accounts receivable, resulting in faster cash generation.

Lowe's saw a significant improvement in its cash conversion cycle from April 29, 2022, to August 4, 2023, where it decreased from 105.21 days to 34.39 days, reflecting a more efficient management of working capital during this period.

However, towards the end of the data series, the cash conversion cycle began to increase again, with values exceeding 100 days in some instances. This indicates a potential slowdown in converting inventory and accounts receivable into cash, which may suggest challenges in managing working capital efficiency.

Overall, it is important for Lowe's Companies Inc to continuously monitor and manage its cash conversion cycle to ensure optimal utilization of its resources and maintain healthy cash flow operations.