RH (RH)
Cash conversion cycle
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Feb 3, 2024 | Jan 31, 2024 | Oct 31, 2023 | Oct 28, 2023 | Jul 31, 2023 | Jul 29, 2023 | Apr 30, 2023 | Apr 29, 2023 | Jan 31, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 31, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 31, 2022 | Jan 29, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 210.75 | 176.28 | 168.00 | 153.86 | 113.94 | 143.97 | 117.11 | 118.11 | 124.36 | 125.37 | 129.33 | 111.31 | 126.83 | 103.30 | 121.75 | 147.47 | 130.37 | 140.78 | 110.80 | 104.84 |
| Days of sales outstanding (DSO) | days | — | — | — | — | 10.04 | — | — | 10.78 | — | 9.20 | — | 8.99 | — | 7.81 | 17.25 | — | 20.84 | — | — | 6.30 |
| Number of days of payables | days | — | — | — | — | 30.95 | — | — | 29.50 | — | 25.55 | — | 22.74 | — | 22.52 | 26.82 | — | 28.28 | — | — | 35.72 |
| Cash conversion cycle | days | 210.75 | 176.28 | 168.00 | 153.86 | 93.03 | 143.97 | 117.11 | 99.40 | 124.36 | 109.01 | 129.33 | 97.56 | 126.83 | 88.59 | 112.18 | 147.47 | 122.94 | 140.78 | 110.80 | 75.41 |
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 shown some fluctuations over the period from January 29, 2022, to January 31, 2025. The cash conversion cycle is a measure of how quickly a company can convert its inventory into cash.
In January 2022, the cash conversion cycle was 75.41 days, indicating that RH was efficiently managing its working capital. However, by April 2022, the cycle had extended to 140.78 days, suggesting potential issues in managing inventory, accounts receivable, and accounts payable.
The cycle continued to increase through July 2022, reaching 147.47 days before improving to 112.18 days by October 2022. This improvement was a positive sign that RH may have addressed some working capital challenges.
The cycle fluctuated between October 2022 and January 2025, with peaks observed in April 2024 (153.86 days), July 2024 (168.00 days), and October 2024 (176.28 days). These extended cycles could indicate slower inventory turnover and collection of receivables or delayed payment to suppliers.
By January 31, 2025, the cash conversion cycle had reached 210.75 days, the highest point in the period analyzed. This indicates potential cash flow challenges and inefficiencies in the company's working capital management.
Overall, the trend of the cash conversion cycle for RH shows some variability, with periods of improvement and deterioration. It is essential for the company to closely monitor and address factors contributing to longer cash conversion cycles to maintain healthy liquidity and operational efficiency.