Ollie's Bargain Outlet Hldg (OLLI)

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	98.47	101.26	110.16	84.31	98.95
Days of sales outstanding (DSO)	days	0.39	0.47	0.29	0.13	0.74
Number of days of payables	days	24.94	19.41	25.13	27.94	18.66
Cash conversion cycle	days	73.92	82.32	85.31	56.49	81.02

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.47 + 0.39 – 24.94
= 73.92

The cash conversion cycle of Ollie's Bargain Outlet Hldg has fluctuated over the past five years. In the most recent fiscal year ending on February 3, 2024, the company's cash conversion cycle was 73.92 days, which represents the average number of days it takes for the company to convert its investments in inventory and other resources into cash flow from sales.

Comparing this to the previous years, we see a decrease in the cash conversion cycle from 82.32 days in 2023 to 73.92 days in 2024, indicating an improvement in efficiency. However, in 2022, the cash conversion cycle was 85.31 days, which was higher compared to both 2023 and 2024.

In 2021, the cash conversion cycle was relatively low at 56.49 days, showing a significant improvement in the company's management of working capital compared to the other years. On the other hand, in 2020, the cash conversion cycle was 81.02 days, closer to the 2023 and 2024 figures, indicating a return to longer cash conversion times.

Overall, fluctuations in the cash conversion cycle can indicate changes in the company's efficiency in managing its operating cycle, inventory turnover, and receivables collection. It is crucial for Ollie's Bargain Outlet Hldg to closely monitor and improve its cash conversion cycle to enhance liquidity and optimize its working capital management.