CarGurus (CARG)

Cash conversion cycle

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Days of inventory on hand (DOH) days 0.79 0.46 1.93 24.40
Days of sales outstanding (DSO) days
Number of days of payables days
Cash conversion cycle days 0.79 0.46 1.93 24.40 0.00

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 0.79 + — – —
= 0.79

The cash conversion cycle of CarGurus has shown varying trends over the past five years. In December 31, 2020, the cash conversion cycle was at 0.00 days, indicating that the company was able to convert its inventory into cash almost instantaneously.

However, in December 31, 2021, the cash conversion cycle increased to 24.40 days, suggesting a potential delay in converting inventory into cash, which could be attributed to factors such as increased inventory levels or slower collection of receivables.

By December 31, 2022, the cash conversion cycle significantly improved to 1.93 days, indicating that CarGurus was able to more efficiently manage its working capital and convert inventory into cash at a quicker pace.

In December 31, 2023, the cash conversion cycle further decreased to 0.46 days, showcasing continued efficiency in working capital management and improved liquidity.

By December 31, 2024, the cash conversion cycle slightly increased to 0.79 days, still maintaining a relatively low level, which signifies that CarGurus is effectively managing its inventory, accounts receivable, and accounts payable to optimize cash flow and enhance financial performance.

Overall, the fluctuation in CarGurus' cash conversion cycle highlights the company's ability to adapt to changing market conditions and implement strategies to improve working capital efficiency over the analyzed period.