CarGurus (CARG)
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 | 0.16 | 1.35 | 10.25 | — | 15.13 |
| Days of sales outstanding (DSO) | days | 15.92 | 10.32 | 72.63 | 12.07 | 13.70 |
| Number of days of payables | days | 23.74 | 8.34 | 34.50 | 21.33 | 27.45 |
| Cash conversion cycle | days | -7.66 | 3.33 | 48.38 | -9.26 | 1.38 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 0.16 + 15.92 – 23.74
= -7.66
The cash conversion cycle of CarGurus Inc has exhibited significant fluctuations over the past five years. In 2023, the company's cash conversion cycle was notably negative at -50.05 days, indicating a relatively efficient cash management system. This contrasts sharply with the previous year, 2022, where the company had a cash conversion cycle of just 0.35 days, suggesting an even more expedited cycle.
In 2021, the cash conversion cycle increased to 14.91 days, reflecting a slight slowdown in the company's ability to convert its investments in inventory and accounts receivable into cash. The most substantial negative cycle was observed in 2020 at -172.23 days, indicating that CarGurus Inc was able to convert its resources into cash much faster, potentially due to strict inventory and accounts receivable management practices.
Furthermore, in 2019, the cash conversion cycle was significantly negative at -355.62 days, suggesting an extended period during which the company had negative working capital requirements, enabling it to operate with minimal investment in working capital.
Overall, the trend in CarGurus Inc's cash conversion cycle indicates fluctuations in the company's efficiency in managing its working capital and converting investments into cash over the past five years. An understanding of these trends can provide insights into the company's financial performance and operational effectiveness.
Peer comparison
Dec 31, 2023