RH (RH)

Cash conversion cycle

Feb 3, 2024 Oct 28, 2023 Jul 29, 2023 Apr 29, 2023 Jan 28, 2023 Oct 29, 2022 Jul 30, 2022 Apr 30, 2022 Jan 29, 2022 Oct 30, 2021 Jul 31, 2021 May 1, 2021 Jan 30, 2021 Oct 31, 2020 Aug 1, 2020 May 2, 2020 Feb 1, 2020 Nov 2, 2019 Aug 3, 2019 May 4, 2019
Days of inventory on hand (DOH) days 92.53 94.48 96.53 96.55 92.32 98.71 102.93 98.73 88.31 80.36 81.92 76.12 74.28 85.71
Days of sales outstanding (DSO) days 10.15 10.35 8.37 8.55 8.24 18.66 21.36 21.64 6.60 7.76 9.46 9.41 11.08 6.49
Number of days of payables days 25.13 23.59 19.67 19.72 20.13 21.74 22.32 30.75 30.09 26.08 30.26 31.16 32.90 28.00 29.08 23.85 35.31 26.84 28.07 34.68
Cash conversion cycle days 77.54 81.23 85.24 85.37 80.44 95.63 101.96 89.62 64.81 62.04 61.12 -31.16 52.63 57.36 -29.08 -23.85 56.89 -26.84 -28.07 -34.68

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.53 + 10.15 – 25.13
= 77.54

The cash conversion cycle of RH, a measure of how efficiently the company manages its working capital, has exhibited fluctuations over the periods analyzed. The cash conversion cycle represents 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 can see that the cash conversion cycle has varied significantly, ranging from negative days to over 100 days. A negative cash conversion cycle indicates that RH is able to collect cash from customers before paying its suppliers, which is a favorable situation. On the other hand, a positive cash conversion cycle suggests that RH is taking longer to collect cash from customers compared to paying its suppliers, potentially leading to working capital challenges.

During the latest observation period, the cash conversion cycle was 77.54 days, indicating a moderate efficiency in managing working capital. On average, over the periods analyzed, the cash conversion cycle was approximately 40 days, which demonstrates that RH has maintained a reasonable balance in converting its investments into cash flows.

It is important for RH to continue monitoring and managing its cash conversion cycle effectively to ensure optimal working capital utilization and sustainable financial performance. By enhancing inventory management, streamlining accounts receivable processes, and negotiating favorable payment terms with suppliers, RH can further optimize its cash conversion cycle and improve its overall financial health.


Peer comparison

Feb 3, 2024

Company name
Symbol
Cash conversion cycle
RH
RH
77.54
Haverty Furniture Companies Inc
HVT
34.52

See also:

RH Cash Conversion Cycle (Quarterly Data)