CarGurus (CARG)

Inventory turnover

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cost of revenue (ttm)	US$ in thousands	735,621	752,705	959,405	1,231,130	1,422,954	1,468,675	1,257,385	952,693	699,810	526,449	453,296	365,796	370,338	282,803	323,621	375,723	355,471	351,782	234,146	123,891
Inventory	US$ in thousands	331	323	541	1,637	5,282	28,166	21,684	20,992	19,656	6,395	—	—	—	17,525	21,189	29,084	20,246	16,801	15,600	17,021
Inventory turnover		2,222.42	2,330.36	1,773.39	752.06	269.40	52.14	57.99	45.38	35.60	82.32	—	—	—	16.14	15.27	12.92	17.56	20.94	15.01	7.28

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $735,621K ÷ $331K
= 2,222.42

Inventory turnover is a key ratio that measures the efficiency of a company in managing its inventory. CarGurus Inc's inventory turnover has shown a fluctuating trend over the past eight quarters. The data reveals significant variations, with the ratio ranging from a low of 24.71 in Q1 2022 to a high of 1,106.51 in Q3 2023.

The inventory turnover ratio indicates how many times CarGurus Inc sold and replaced its inventory during a specific period. A higher inventory turnover ratio implies that the company is selling its inventory quickly and efficiently, which is generally a positive sign. However, such a high ratio in some quarters, like Q3 2023, may suggest possible inventory shortages or challenges in meeting customer demand.

On the other hand, the lower inventory turnover ratio in Q1 2022 indicates that CarGurus Inc may have had excess inventory on hand, which can tie up capital and increase storage costs. This could potentially result in inventory obsolescence or the need for markdowns to clear excess stock.

Overall, CarGurus Inc's inventory turnover analysis suggests that the company has experienced significant fluctuations in managing its inventory levels efficiently. It is important for the company to assess the reasons behind these fluctuations and strive to maintain a balance between carrying sufficient inventory to meet demand while avoiding excess stock that can impact profitability.