CarGurus (CARG)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		22.93	35.38	5.03	30.24	26.65
DSO	days	15.92	10.32	72.63	12.07	13.70

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 22.93
= 15.92

Days Sales Outstanding (DSO) measures how long it takes for a company to collect its accounts receivable. A lower DSO indicates faster collection of receivables, which can improve cash flow and liquidity.

Analyzing CarGurus Inc's DSO over the past five years, we observe significant fluctuations. In 2023, the DSO stands at 15.95 days, which is higher compared to the previous year but still relatively efficient. In 2022, the DSO was at 10.32 days, showing a rapid collection of receivables. However, in 2021, the DSO spiked to 72.64 days, indicating a prolonged collection period. This significant increase may be a cause for concern as it could potentially impact the company's cash flow and working capital management.

The decreasing trend in DSO from 2021 to 2020 and 2019 is encouraging as it suggests an improvement in CarGurus Inc's accounts receivable management. In 2020, the DSO was at 12.07 days, indicating a quicker collection of receivables compared to the high in 2021. Similarly, in 2019, the DSO stood at 13.71 days, showing consistent performance in receivables collection over the past few years.

Overall, it is essential for CarGurus Inc to closely monitor and manage its DSO to ensure timely collection of receivables and maintain healthy cash flow levels. Efforts to optimize collections processes and strengthen customer credit policies may further enhance the company's liquidity position.