Ulta Beauty Inc (ULTA)

Cash conversion cycle

		Feb 3, 2024	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	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Days of inventory on hand (DOH)	days	90.73	127.86	101.86	100.84	92.61	131.90	107.03	104.56	102.12	140.23	110.05	109.35	96.87	122.90	115.45	109.02	100.11	128.25	106.02	103.17
Days of sales outstanding (DSO)	days	6.77	6.81	5.93	6.62	7.13	7.53	7.03	7.78	9.88	7.62	7.36	8.14	11.46	7.95	7.31	4.74	6.87	5.71	5.52	5.81
Number of days of payables	days	29.09	32.90	29.25	35.78	33.13	40.36	37.70	38.98	38.34	54.70	40.80	44.66	41.43	40.86	33.58	37.90	32.04	47.19	36.26	33.62
Cash conversion cycle	days	68.41	101.76	78.54	71.68	66.60	99.06	76.36	73.36	73.67	93.16	76.61	72.83	66.89	89.98	89.18	75.86	74.94	86.76	75.28	75.36

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 90.73 + 6.77 – 29.09
= 68.41

The cash conversion cycle of Ulta Beauty Inc fluctuated over the past few quarters, indicating variations in its efficiency in managing its cash flow and working capital.

The company's cash conversion cycle ranged from a low of 66.60 days to a high of 101.76 days, with the most recent figure reported at 68.41 days as of February 3, 2024. This metric reflects the average time it takes for Ulta Beauty to convert its investments in inventory and accounts receivable into cash received from sales.

A lower cash conversion cycle suggests that Ulta Beauty is more efficient in managing its working capital, turning inventory and receivables into cash quickly. Conversely, a longer cash conversion cycle may indicate inefficiencies in managing working capital, potentially leading to increased costs and liquidity constraints.

It is essential for Ulta Beauty to closely monitor and potentially improve its cash conversion cycle to optimize cash flows, reduce financing costs, and enhance overall financial performance. Regularly tracking this metric and comparing it to industry benchmarks can provide valuable insights into the company's operational efficiency and financial health.