AutoNation Inc (AN)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	50.75	34.42	32.29	56.38	67.74
Days of sales outstanding (DSO)	days	14.09	11.62	10.31	15.13	15.68
Number of days of payables	days	5.77	5.51	6.92	7.27	5.95
Cash conversion cycle	days	59.07	40.53	35.68	64.23	77.47

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 50.75 + 14.09 – 5.77
= 59.07

The cash conversion cycle of Autonation Inc. has fluctuated over the past five years. In 2019, the company had a relatively long cash conversion cycle of 77.47 days, indicating the time it took for Autonation to convert its investments in inventory and other resources into cash.

However, there was a significant improvement in 2020 when the cash conversion cycle decreased to 64.23 days. This improvement suggests that Autonation managed its working capital more efficiently, reducing the time it took to generate cash from its operations.

In 2021, Autonation further improved its cash conversion cycle to 35.68 days, indicating a more streamlined and effective working capital management process. This significant reduction can be a positive indicator of the company's ability to optimize its resources and generate cash more quickly.

In 2022, there was a slight increase in the cash conversion cycle to 40.53 days, which may signal a temporary slowdown or change in the company's working capital efficiency.

The most recent data for 2023 shows a further increase in the cash conversion cycle to 59.07 days, which might warrant investigation into any potential factors contributing to this reversal in efficiency.

Overall, the trend in Autonation Inc.'s cash conversion cycle indicates fluctuations in the company's ability to efficiently manage its working capital over the past five years. It is essential for stakeholders to monitor these changes closely to assess the company's operational and financial performance.