Best Buy Co. Inc. (NYSE:BBY)

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating pattern throughout the periods analyzed. Initially, it held values around 6.0 to 6.5, then decreased significantly in certain quarters, particularly evident around early 2018 and mid-2020, with values dropping below 5. Subsequently, it showed a recovery up to roughly 8.3 before declining again towards the end of the series. This indicates varying efficiencies in managing inventory, with occasional periods of slower inventory movement.

Receivables Turnover

The receivables turnover ratio demonstrates a generally upward trend marked by notable volatility. Starting near the high 20s, it reached peaks exceeding 60 in some recent quarters, reflecting improved effectiveness in collecting receivables. However, intermittent declines suggest fluctuations in credit management or customer payment behaviors affecting turnover speed.

Payables Turnover

The payables turnover ratio shows a cyclical pattern, oscillating between roughly 4.0 and 7.5. Periods of lower turnover align with higher average payables payment periods, indicating times when payments to suppliers were deferred longer. The variability suggests changing supplier payment strategies or shifts in negotiation terms over quarters.

Working Capital Turnover

A strong upward trend characterizes the working capital turnover ratio with a particularly sharp and irregular increase starting around late 2017 into 2020, peaking above 200 at one point. This suggests a significant improvement in utilizing working capital to generate sales, though the extreme peaks may indicate one-off effects or timing anomalies. The data becomes incomplete towards the end of the period, limiting full trend assessment.

Average Inventory Processing Period

This metric exhibits variability between approximately 44 and 89 days. Notable elongations occurred in early 2018 and late 2019 to early 2020, indicating slower inventory turnover in those quarters. Periods with shorter processing times imply increased efficiency in managing stock.

Average Receivable Collection Period

The average days to collect receivables remain relatively stable, fluctuating mostly between 6 and 10 days, with minor seasonal or short-term deviations. This stability suggests consistent credit and collection policies over time.

Operating Cycle

The operating cycle mirrors the trends seen in inventory processing and receivables collection periods, ranging roughly from 60 to 97 days. The cycle lengthened during specific intervals, especially in early 2018 and late 2019, indicating slower conversion of resources into cash in those periods.

Average Payables Payment Period

Average payables payment days show considerable oscillation, spanning from about 49 to 94 days. Extended payment periods appear in some quarters, particularly in early 2020 and late 2020 to early 2021, possibly reflecting strategic supplier payment deferrals aimed at preserving liquidity.

Cash Conversion Cycle

The cash conversion cycle fluctuates between negative and positive values, generally ranging from about -19 days to 13 days. Notably, several quarters during 2020 show negative cycles, implying that payables were settled slower than the combined durations of inventory processing and receivables collection, which improves short-term liquidity. The positive cycles at other times suggest a more conventional cash flow timing.

Cost of Sales

The cost of sales demonstrates a cyclical pattern aligning with seasonal business fluctuations, showing peaks typically in the first quarter of each fiscal year, with values often surpassing 10 billion US dollars. Over the examined periods, the cost of sales shows an overall increasing trend from approximately 6.3 billion to highs exceeding 13 billion, particularly notable in early 2021. However, there is notable variability with occasional declines, such as the drop observed in mid-2022. This pattern suggests a strong seasonality component influenced by annual sales cycles.

Merchandise Inventories

Merchandise inventories fluctuate similarly in a seasonal manner, typically peaking in the fourth quarter of each fiscal year. Values range significantly from just under 4 billion to over 8 billion US dollars at peak levels. Notably, mid-2020 inventory levels declined sharply to around 4 billion amidst the periods analyzed, corresponding with increased inventory turnover rates. Inventory numbers rebounded afterward but demonstrated increased volatility compared to earlier years, with peaks and troughs indicating adjustments in stock management and potential responses to market demand shifts.

Inventory Turnover

Inventory turnover exhibits a clear seasonal pattern with lower turnover ratios generally occurring in the first quarter of each fiscal year and higher turnover ratios in mid-year quarters. Throughout the data range, the turnover ratio varies typically between about 4 and 8.3 times. There is a discernible increase in turnover ratios during 2020 reaching above 8, suggesting improved inventory efficiency or accelerated stock movement during this period. The ratios stabilize closer to the 5-6 range in subsequent years, although some higher values persist, indicating ongoing efforts or conditions favoring quicker inventory conversion.

Overall Insights

The data reflect a business with strong seasonality affecting cost of sales and inventories. Peaks in cost typically coincide with higher inventory levels before peaking quarters, demonstrating inventory buildup ahead of demand surges. The inventory turnover ratio's inverse pattern to inventory levels confirms effective sales-driven inventory management cycles. The marked increase in inventory turnover in the 2020 period suggests rapid adjustments possibly due to market disruptions or shifts in consumer behavior. The inventory and cost figures in later years show slightly more volatility, which may reflect changing operational strategies or external economic factors.

The analyzed data reveals several notable trends across revenue, net receivables, and receivables turnover for the periods under review.

Revenue

Revenue exhibits a recurring seasonal pattern with substantial peaks typically around the January quarter, suggesting strong sales during the holiday season. This seasonal uplift appears consistently every fiscal year, with the January 2017, 2018, 2019, 2020, and 2021 quarters showing the highest revenues compared to other quarters in their respective years.

There is variability in the magnitude of revenue peaks over the years. For example, peak revenue in January 2021 is markedly higher than in previous years, indicating a potential growth in business or increased demand during that period. However, the data also demonstrates occasional declines in the quarters following the peaks, such as the gradual decrease observed from May 2018 through November 2019, and again after the peak in January 2022.

Overall, revenue fluctuates between roughly 8,400 million and over 16,900 million US dollars, with the highest quarter being January 2021.

Receivables, net

The net receivables values show moderate variation over time but lack an obvious seasonal trend as seen in revenue. Receivables appear to fluctuate between approximately 750 million and 1,170 million US dollars, with no clear upward or downward long-term trend.

There are instances where net receivables decrease concurrently with revenue peaks, such as in January quarters, which may indicate effective collections during periods of high sales. Conversely, some periods show increased receivables with relatively stable or declining revenue, suggesting variability in credit terms or customer payment behavior.

Receivables turnover ratio

The receivables turnover ratio demonstrates generally high efficiency in collection, ranging from about 29 to over 63 times per period. This ratio tends to surge significantly in the quarters following high revenue periods, suggesting quicker turnover of receivables post-peak sales.

Notable spikes occur in February quarters like 2020, 2021, and 2022, where the turnover ratio exceeds 50 and even surpasses 60, representing strong collection performance. Lower turnover ratios occur in the quarters with lower revenue, reflecting a slower collection cycle or increased outstanding credit.

This pattern indicates a cyclical working capital management approach, aligning with sales seasonality and reflecting strategic efforts to optimize cash flow during high and low sales periods.

In summary, the data indicates a clear seasonal sales pattern with strong peaks in the first quarter of each year accompanied by efficient management of receivables and collection processes. Revenue growth is variable but demonstrates significant increases in some years, while net receivables remain relatively stable. The receivables turnover ratios confirm generally effective collection practices, particularly in quarters succeeding revenue peaks.

The financial data reveals several notable trends in Best Buy Co. Inc.'s cost of sales, accounts payable, and payables turnover over the observed periods.

Cost of Sales

The cost of sales demonstrates a generally increasing pattern with periodic spikes corresponding to certain quarters. Starting at $6,298 million in April 2016, the cost rose steadily towards $10,452 million in January 2017, reflecting a significant jump during that quarter. Subsequent quarters show fluctuations around the $6,500 to $7,500 million range, followed by another substantial rise reaching $13,394 million in January 2021. The data indicates that cost of sales tends to peak in specific periods, most likely due to seasonal factors or promotional events, with an overall long-term upward trajectory.

Accounts Payable

Accounts payable figures display considerable variability across quarters, ranging from approximately $4,397 million in April 2016 to peaks such as $9,110 million in October 2020. Similar to the cost of sales, accounts payable tends to increase sharply in the first quarters of fiscal years, followed by reductions in subsequent quarters. This cyclical movement may be tied to payment cycles or supplier negotiations, with the highest payables occurring in the late 2020 period. The data reflects a correlation with the cost of sales increases but with greater volatility.

Payables Turnover Ratio

The payables turnover ratio exhibits pronounced fluctuations, varying between approximately 3.87 and 7.50 across the reported periods. Peaks in turnover ratios are observed in mid-year quarters (e.g., July 2018 at 7.09, July 2020 at 7.50), while the lowest ratios typically appear in early-year quarters, indicating slower payments to suppliers during those times. This pattern suggests changes in payment strategy or seasonal cash management practices. The variability in turnover ratio highlights shifting efficiency or policies in managing payables over time.

Working Capital Trends

The working capital exhibits a downward trend over the observed periods, starting from a high point of 2948 million US dollars in April 2016 and gradually declining to negative values by 2022, reaching -248 million US dollars by October 2022. This decline is particularly notable beginning in 2018, with significant decreases occurring in 2021 and 2022. The fluctuations in working capital suggest increasing challenges in managing current assets and liabilities effectively over time.

Revenue Patterns

Revenue figures demonstrate a generally cyclical but upward trend with clear seasonality effects. Peaks are observed consistently in the first fiscal quarter of each year, notably in January 2017 (13482 million US dollars), January 2018 (15363 million US dollars), January 2019 (14801 million US dollars), continuing to peaks in January 2021 (16937 million US dollars) and January 2022 (16365 million US dollars). Between these peaks, revenues show moderate fluctuations but generally maintain a growth trajectory except for some declines seen in mid-2022.

Working Capital Turnover

The working capital turnover ratio, available from January 2017 onwards, reveals a sharp increasing trend, rising from 11.61 to a peak of 96.31 in February 2020. This rapid increase indicates that revenue generation per unit of working capital has improved significantly during this phase, reflecting enhanced efficiency in utilizing working capital. However, post-February 2020, the ratio becomes highly volatile with extreme highs and lower values, such as 224.26 in May 2020 followed by declines to the twenties range by late 2021, which aligns with the pronounced drops and negative values in working capital in the same period. Missing data in the latter periods limit precise analysis but suggest instability.

Insights and Implications

The overall financial data point to increasing revenue and improved efficiency in working capital utilization up until early 2020. However, recent periods show signs of strain with negative working capital and volatile turnover ratios, implying potential liquidity or operational challenges. The cyclical revenue pattern underscores strong seasonal influences, which management likely considers in working capital planning. The negative working capital at the end of the period could indicate tighter current asset management or increased short-term liabilities, warranting careful attention to maintain operational stability.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a notable seasonal fluctuation throughout the observed periods. In several instances, peaks in the ratio coincide with lower values in surrounding quarters, suggesting cyclical changes in inventory management or sales volume. For example, the ratio typically declines in the quarters starting in January and October, indicating slower inventory turnover during these periods.

Over the longer term, a general pattern emerges where the ratio oscillates between values around 4.0 to 8.3. The highest recorded turnover was approximately 8.32 in the quarter ending in May 2020, indicating a brisk pace of inventory sales during that period. Conversely, the lowest points, close to 4.08 occurring in February 2018, suggest slower turnover periods. Despite these fluctuations, there is no clear upward or downward trend across the entire dataset, but rather a persistent seasonal pattern.

Average Inventory Processing Period

The average inventory processing period generally moves inversely to the inventory turnover ratio, which is consistent with the mathematical relationship between these metrics. Periods of high inventory turnover correspond to shorter processing periods, indicating faster inventory movement through operations.

Seasonal fluctuations are also evident here, with processing periods extending to around 77 to 89 days typically in quarters where turnover dips, notably in the quarters ending in February of several years. Shorter processing times, near 44 to 56 days, occur during quarters with higher turnover ratios, such as those around mid-year or May filings.

Overall, the average number of days varies between approximately 44 and 89 across the dataset, reflecting cyclical inventory management or sales activity patterns consistent with retail seasonality. There is no significant long-term trend indicating a systematic increase or decrease in the inventory holding period over the examined intervals.

Summary of Observations

The data indicates a well-established seasonal pattern in inventory management, with turnover ratios peaking and dropping predictably within the fiscal year. This seasonality may be tied to consumer purchasing behaviors, promotional cycles, or supply chain adjustments typical in retail operations.

While the inventory turnover has some quarterly variability, the overall balance between turnover and inventory processing periods remains consistent over the years, reflecting stable inventory control practices. Notably, the quarter ending in May 2020 shows an exceptional spike in turnover ratio and a corresponding drop in processing days, which may signal a period of unusually efficient inventory movements or heightened market demand.

No significant long-term increasing or decreasing trend is found, suggesting that the company maintains relatively steady inventory management efficiency despite periodic seasonal impacts.

The receivables turnover ratio exhibits an overall upward trend starting from the first available data point. Initial values around 29.25 rapidly increase, peaking multiple times above 50 and reaching a maximum near 63.15 by April 2022. This trend indicates an improvement in the efficiency of collecting receivables over the period analyzed, suggesting enhanced credit control or higher cash flow through receivables.

The average receivable collection period, expressed in number of days, displays a general decline over the same period. Early values stabilize around 12 days but quickly reduce to a range mainly between 6 and 9 days in later quarters. This shortening of the collection period aligns with the increase in receivables turnover, reflecting quicker cash conversion from receivables.

There are fluctuations within short time frames, for example, slight increases in collection days correspond with minor decreases in turnover ratios. Notably, distinct peaks in turnover, such as those observed around early 2021 and mid-2022, correspond to some of the shortest collection periods of around 6 days, reinforcing the inverse relationship between the two metrics.

Overall, the data suggests consistent improvements in the management of receivables, with the company accelerating its collection process and thereby improving liquidity. No sustained periods of deterioration are apparent; rather, transient minor deviations occur within an overall positive trajectory.

Receivables Turnover Ratio Trends

Initial ratios start in the high 20s to low 40s and increase steadily.

Multiple peaks above 50 demonstrate enhanced receivable turnover efficiency.

The highest recorded ratio near 63 indicates very efficient receivable management in the latest period.

Average Receivable Collection Period Trends

Gradual reduction from approximately 12 days down to a consistent range of 6-9 days.

Lowest collection days correspond with highest receivable turnover ratios.

The shorter collection period implies quicker cash inflows and stronger credit policies.

Relationship Between Metrics

Receivables turnover and average collection days move inversely, as expected.

Periods of improved turnover coincide with accelerated collection periods, validating efficiency gains.

Overall Financial Insight

The company achieved continuous strengthening in receivables management from 2016 through 2022.

Improved receivables turnover and reduced collection days likely contribute positively to working capital and liquidity positions.

The data reveals fluctuations in key operational efficiency metrics over several quarters, highlighting varying trends in inventory management, receivables collection, and the overall operating cycle.

Average Inventory Processing Period

The average inventory processing period demonstrates significant variability across the timeframe. Initial data points from the mid-2016 period indicate figures primarily in the high 50s to low 60s range (approximately 55 to 62 days). Notably, there are several spikes where the period extends considerably, reaching values close to or above 80 days, such as in early 2018 and early 2020. Contrastingly, lower values around the mid-40 days mark occur in mid-2020, indicating improved inventory turnover during that time. The latest periods tend to fluctuate between the mid-50s and high 60s with occasional rises to the 70s, suggesting intermittent challenges in inventory management or changes in sales patterns affecting stock levels.

Average Receivable Collection Period

The average receivable collection period shows relative stability with a general trend toward maintaining low values, mostly ranging between 6 and 10 days. There is evidence of slight improvements in certain quarters with collection periods dipping to around 6 days, particularly during mid-2020 and extending into 2021, which may reflect more efficient credit management or customer payment behavior. Some minor oscillations exist but without dramatic shifts, indicating consistent control over receivables and efficient cash collection practices throughout the periods assessed.

Operating Cycle

The operating cycle reflects a composite picture influenced by both inventory processing and receivable collection periods. The cycle exhibits considerable variability, oscillating mainly between approximately 60 and 90 days. Peaks in the operating cycle correspond with periods where inventory processing periods were elevated, such as early 2018 and early 2020, suggesting inventory holding is a major driver of operating cycle length. Conversely, shorter operating cycles occur during times of lower inventory days, evident in mid-2020. Despite fluctuations, the company maintains an operating cycle generally within a two- to three-month range, aligning with the need for balanced working capital management amidst changing operational conditions.

The payables turnover ratio and the average payables payment period present notable fluctuations over the observed periods. Starting from the earliest data point available in April 2016, the payables turnover ratio exhibits a cyclical pattern with distinct peaks and troughs, indicating variability in the frequency with which the company settles its payables throughout the years.

The ratio generally fluctuates between approximately 4.19 and 7.50, with particularly high values observable around mid-2017, mid-2020, and mid-2022. These peaks correspond to periods where the company appears to have converted its payables more rapidly. Conversely, significant decreases in turnover, with values dropping below 5.00, often coincide with periods where the average payment period increases, suggesting longer payment cycles.

When examining the average payables payment period, the data reveal an inverse relationship with the payables turnover ratio, as expected. The payment period oscillates between roughly 49 and 94 days. Lower payment periods, indicating faster payment to suppliers, align with higher turnover ratios, while longer payment periods are associated with lower turnover figures.

There is evidence of pronounced seasonality and possible operational or strategic shifts impacting these metrics. For example, peaks in the payables turnover ratio around July 2017 (7.09) and July 2022 (7.19 and 7.12) correspond with reduced payment periods near 51 days. Alternatively, during the quarters ending in February 2018 and January 2021, the payment period extends to approximately 87 and 94 days respectively, with the payables turnover ratio declining to some of its lowest levels in the range of 3.87 to 4.19.

Overall, the data suggest that the company periodically adjusts its payment practices, possibly reflecting changes in cash management policies or supplier negotiations. The fluctuations in these ratios over time highlight the dynamic nature of payable management within the organization's operational context.

Payables turnover ratio

Varies between approximately 4.19 and 7.50, indicating fluctuating frequency of payable settlements. Shows cyclical behavior with peaks often in mid-year quarters.

Average payables payment period

Ranges from about 49 to 94 days, inversely related to turnover ratio. Longer payment periods correspond with lower turnover ratios, suggesting slower payment to suppliers during these times.

Relationship between metrics

Clear inverse correlation observed: high turnover correlates with shorter payment periods and vice versa.

Seasonality and trends

Repeated cycles suggest possible seasonal influences or intentional adjustments in payment strategies across reporting periods.

Average Inventory Processing Period

The average inventory processing period exhibits a fluctuating pattern over the analyzed quarters. Initial values start at 59 days and experience intermittent increases and decreases, peaking notably at 89 days in early 2018 and again reaching high values around 83 days in early 2020. From mid-2020, there is a general trend towards lower values, with periods around 44 to 58 days, followed by a moderate increase again towards 71 days by late 2022. This volatility suggests variations in inventory turnover efficiency through the period.

Average Receivable Collection Period

The receivable collection period remains relatively stable, with minor fluctuations between 6 to 12 days throughout the periods. It generally stays within the narrower range of 6 to 9 days, indicating consistent effectiveness in collecting receivables. Slight dips to as low as 6 days in multiple quarters show an improvement in collection efficiency, while occasional small rises to 9 or 10 days indicate minor delays but within a tight band.

Average Payables Payment Period

The payables payment period demonstrates significant variability. Starting around 61 days early in the data, it fluctuates, sometimes sharply increasing to values above 80 or even 94 days, notably in early 2018 and late 2020. Periods of relatively shorter payment spans around 49 to 60 days occur intermittently, suggesting shifts in payment policies or liquidity management. The observed higher values at certain points may indicate strategic extensions of payment periods.

Cash Conversion Cycle

The cash conversion cycle shows pronounced changes over the analyzed timeframe. Initially, the cycle maintains a positive range around 9 to 13 days, indicating the company’s working capital tied up in operations is moderate. From mid-2020 onward, the cycle shifts into negative territory with values reaching as low as -19 days, suggesting an accelerated conversion of inventory and receivables into cash relative to payables. This negative cash conversion cycle signals improved liquidity and operational efficiency, with the company likely managing to defer payments while accelerating collections and inventory turnover. Towards late 2022, the cycle returns to slightly positive values around 11 to 13 days, implying a partial normalization of working capital management.