Ross Stores Inc (ROST)

Cash conversion cycle

		Jan 31, 2025	Nov 2, 2024	Aug 3, 2024	May 4, 2024	Feb 3, 2024	Oct 31, 2023	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
Days of inventory on hand (DOH)	days	58.47	68.24	59.72	56.85	47.94	58.33	54.68	48.84	48.48	46.06	57.22	62.59	64.25	54.36	56.13	48.53	52.36	52.31	60.08	40.97
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	3.18	3.32	3.30	2.84	3.33	3.31	—	2.31	3.20	—	—	3.36	—	—
Number of days of payables	days	—	—	—	—	—	—	47.71	45.68	44.58	45.75	44.23	48.05	—	57.00	66.74	—	—	78.24	—	—
Cash conversion cycle	days	58.47	68.24	59.72	56.85	47.94	58.33	10.16	6.48	7.20	3.15	16.32	17.85	64.25	-0.34	-7.41	48.53	52.36	-22.57	60.08	40.97

January 31, 2025 calculation

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

Ross Stores Inc's cash conversion cycle is a financial metric that measures how long it takes for the company to convert its investments in inventory into cash flows from sales. A lower cash conversion cycle indicates that the company is efficient in managing its working capital and turning inventory into cash quickly.

Analyzing the data provided, we observed fluctuations in Ross Stores Inc's cash conversion cycle over the analyzed periods. The company's cash conversion cycle ranged from a positive 64.25 days in April 2022 to a negative 22.57 days in January 2021. A negative cash conversion cycle suggests that Ross Stores Inc is efficiently managing its working capital, possibly due to quick inventory turnover and prompt collection of receivables.

In general, a positive cash conversion cycle may indicate that Ross Stores Inc is taking longer to convert its inventory into sales and then into cash, which could potentially signal inefficiencies in working capital management. On the other hand, a negative cash conversion cycle may indicate that the company is effectively managing its cash flow and working capital, resulting in a quicker turnaround of investments into cash.

Overall, it is essential for Ross Stores Inc to closely monitor its cash conversion cycle to ensure efficient working capital management, improve liquidity, and maximize cash flows from operations. Continued optimization of inventory levels, collections, and payment cycles can help the company maintain a healthy and sustainable cash conversion cycle.