Lululemon Athletica Inc. (LULU)

Cash conversion cycle

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Nov 3, 2019	Aug 4, 2019	May 5, 2019
Days of inventory on hand (DOH)	days	65.18	108.50	114.17	114.07	109.82	216.43	191.86	88.71	71.61	147.91	65.83	66.80	65.76	85.24	78.50	74.70	61.24	77.72	64.05	60.10
Days of sales outstanding (DSO)	days	4.74	4.24	4.38	4.61	5.96	4.68	4.21	4.29	4.50	4.72	3.73	4.21	5.18	5.36	4.61	4.61	3.69	3.48	2.82	2.15
Number of days of payables	days	17.16	20.17	20.55	20.75	13.11	18.69	17.05	21.43	21.47	17.79	16.97	17.95	17.50	17.77	14.32	9.42	9.45	14.41	14.32	11.97
Cash conversion cycle	days	52.76	92.57	98.00	97.92	102.67	202.42	179.02	71.56	54.64	134.85	52.60	53.06	53.44	72.82	68.78	69.89	55.49	66.79	52.55	50.27

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.18 + 4.74 – 17.16
= 52.76

The cash conversion cycle of Lululemon Athletica Inc. has exhibited some fluctuations over the past several reporting periods. The cash conversion cycle measures the time it takes for a company to convert its inventory into sales and then into cash. A shorter cash conversion cycle indicates that the company is more efficient in managing its working capital.

From the data provided, we can observe that the cash conversion cycle ranged from a low of 52.55 days to a high of 202.42 days over the periods analyzed. The longest cash conversion cycle was recorded on Oct 30, 2022, while the shortest cycle was on Nov 3, 2019.

Generally, a high cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying payables. On the other hand, a low cash conversion cycle can signify strong inventory and receivables management practices.

It is vital for Lululemon Athletica Inc. to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management and operational efficiency. By analyzing the components of the cash conversion cycle and identifying areas for improvement, the company can enhance its liquidity position and overall financial performance.