Ulta Beauty Inc (ULTA)

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 31, 2022	Oct 29, 2022	Jul 31, 2022	Jul 30, 2022	Apr 30, 2022	Jan 31, 2022
Days of inventory on hand (DOH)	days	103.99	123.89	95.25	91.78	83.45	94.29	139.67	137.80	106.35	98.77	88.93	91.52	86.32	93.04	140.60	139.86	104.05	98.44	95.30	94.08
Days of sales outstanding (DSO)	days	—	—	—	—	6.28	—	—	7.27	—	5.78	—	6.08	—	7.14	—	7.88	—	6.52	—	—
Number of days of payables	days	—	—	—	—	26.76	—	—	35.46	—	28.36	—	32.47	—	33.29	—	42.80	—	34.67	—	—
Cash conversion cycle	days	103.99	123.89	95.25	91.78	62.98	94.29	139.67	109.61	106.35	76.18	88.93	65.13	86.32	66.89	140.60	104.94	104.05	70.29	95.30	94.08

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 103.99 + — – —
= 103.99

The cash conversion cycle of Ulta Beauty Inc, calculated as the sum of days sales outstanding (DSO), days inventory outstanding (DIO), and days payables outstanding (DPO), provides insight into how efficiently the company manages its working capital.

Analyzing the data provided, we observe fluctuations in Ulta Beauty Inc's cash conversion cycle over the reported periods. The cycle ranged from a low of 62.98 days on February 3, 2024, to a high of 140.60 days on October 31, 2022. Generally, a lower cash conversion cycle is favorable as it indicates that the company is efficiently converting its resources into cash.

During the period, the cash conversion cycle peaked at 140.60 days on October 31, 2022, which suggests that Ulta Beauty Inc took longer to convert its investments in inventory and receivables into cash. This could potentially be due to extended payment terms or inventory holding periods.

Conversely, the cycle decreased to a low of 62.98 days on February 3, 2024, reflecting an improvement in efficiency in managing working capital. A shorter cash conversion cycle typically indicates that a company is better at managing its cash flow and liquidity.

Overall, fluctuations in Ulta Beauty Inc's cash conversion cycle over the analyzed periods highlight the importance of monitoring working capital management practices. Efforts to streamline operations, optimize inventory levels, and manage accounts receivable and payable effectively can lead to a more efficient cash conversion cycle, ultimately benefiting the company's financial health.