Ross Stores Inc (ROST)

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	58.47	44.28	54.06	52.96	44.21
Days of sales outstanding (DSO)	days	—	2.32	—	—	2.84
Number of days of payables	days	—	39.51	—	—	43.91
Cash conversion cycle	days	58.47	7.10	54.06	52.96	3.14

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 58.47 + — – —
= 58.47

The cash conversion cycle of Ross Stores Inc has shown some fluctuation over the years based on the provided data.

On January 28, 2023, the company had a very short cash conversion cycle of 3.14 days, indicating efficient management of its operating cycle. However, this improved scenario was not sustained, as the cycle increased significantly to 52.96 days by January 31, 2023. This may suggest potential issues with managing inventory, receivables, or payables during that period.

Subsequently, there was a further increase to 54.06 days by January 31, 2024, indicating a longer time taken to convert raw materials into cash. This prolonged cycle could impact the company's liquidity and working capital management.

A significant improvement was observed by February 3, 2024, with the cash conversion cycle reducing to 7.10 days. This sudden improvement might indicate more efficient inventory turnover or better collection of receivables during that period.

However, by January 31, 2025, the cycle increased once again to 58.47 days, surpassing previous highs. This extended cycle could potentially signal operational inefficiencies or challenges in managing the company's cash flow and working capital.

Overall, the fluctuating cash conversion cycle of Ross Stores Inc over the years suggests the need for continued monitoring and improvement in managing operating efficiency, inventory turnover, accounts receivable, and payables to optimize cash flow and working capital management.