RH (RH)
Cash conversion cycle
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 210.75 | 92.38 | 167.83 | 164.56 | 92.55 |
| Days of sales outstanding (DSO) | days | — | 10.15 | — | — | 8.25 |
| Number of days of payables | days | — | 25.09 | — | — | 20.18 |
| Cash conversion cycle | days | 210.75 | 77.43 | 167.83 | 164.56 | 80.62 |
January 31, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 210.75 + — – —
= 210.75
The cash conversion cycle for RH has fluctuated over the years based on the provided data. In January 2023, the company's cash conversion cycle was 80.62 days, indicating that it took approximately 80 days for RH to convert its investments in inventory and other resources into cash from sales. By January 2025, this cycle had extended to 210.75 days, signifying a significant increase in the time it takes for the company to generate cash from its operational activities.
Overall, the trend in the cash conversion cycle shows some volatility, with periods of both shorter and longer cycles. A longer cash conversion cycle can indicate inefficiencies in working capital management, tied to slow inventory turnover or extended receivable collection periods. On the other hand, a shorter cycle may suggest a more efficient use of resources and quicker cash generation from sales. RH should closely monitor and manage its cash conversion cycle to optimize its working capital efficiency and overall financial performance.