Ross Stores Inc (ROST)

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	44.28	44.21	49.79	44.63	48.14
Days of sales outstanding (DSO)	days	2.32	2.84	2.31	3.44	2.32
Number of days of payables	days	39.51	43.91	52.21	66.75	34.06
Cash conversion cycle	days	7.10	3.14	-0.11	-18.68	16.40

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.28 + 2.32 – 39.51
= 7.10

The cash conversion cycle for Ross Stores Inc has been fluctuating over the past five fiscal years. In the most recent period, as of February 3, 2024, the cash conversion cycle increased to 7.10 days compared to the previous year, indicating that the company took longer to convert its investments in inventory into cash receipts from sales. This could suggest potential inefficiencies in managing inventory levels or collection of receivables.

In the prior year, as of January 28, 2023, the cash conversion cycle stood at 3.14 days, showing an improvement from the negative cycle of -0.11 days reported in January 29, 2022. A negative cash conversion cycle suggests that the company was able to collect cash from customers before having to pay its suppliers, which is generally a favorable position indicating strong liquidity management.

On the contrary, in January 30, 2021, the cash conversion cycle was notably negative at -18.68 days, indicating that Ross Stores Inc had a significant delay in paying its suppliers compared to collecting cash from customers. This situation could imply a higher risk of stockouts or strained supplier relationships.

In February 1, 2020, the cash conversion cycle increased to 16.40 days compared to the prior year, showing a prolonged period for the company to convert its investments in inventory into cash receipts. This might suggest challenges in managing working capital efficiently and optimizing the cash conversion process.

Overall, the trend in the cash conversion cycle for Ross Stores Inc shows variability in the company's efficiency in managing its working capital and converting investments into cash across the years, highlighting the importance of monitoring and improving operational processes related to inventory management and cash collection.