Please respond to the below written assignment, write one paragraph in length.

Home Depot Financials

1. Annual sales = $88,519,000
2. Cost of sales = $58,254,000
3. Depreciation = $1,863,000

Balance sheet

1. Inventories = $11,809,000
2. Accounts receivable = $1,890,000
3. Accounts payable = $10,533,000

Calculations

1. Inventory turnover = Cost of sales Inventory =4.93
2. Accounts receivable turnover= Net sales Average net sales=4.68
3. Accounts payable turnover = Cost of sales Accounts payable =8.4
4. Production cycle = 360 x inventories Cost of sales =72.97
5. Collection cycle = Sales 365 = 242,517. Accounts receivable 242,517 =7.79
6. Accounts payable cycle = Accounts payable (cost of sales) 365 =66

Cash conversion cycle

CCC = Inventory Cost of goods + Accounts receivable Sales accounts payable cost of sales =14.6

Home Depot has a cash conversion cycle of 14.6 days which is relatively short for a billion-dollar company. I dont think the Home Depot needs to work on shortening its conversion time. It is important for companies to have as low of a conversion time as possible to make sure their sales and receivables are converted over to cash for use by the company. Its especially important for retailers that need the cash to buy inventory before it can be sold to the customer.