CarGurus (CARG)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	0.16	0.16	0.21	0.49	1.35	7.00	6.29	8.04	10.25	4.43	—	—	—	22.62	23.90	28.25	20.79	17.43	24.32	50.15
Days of sales outstanding (DSO)	days	15.91	17.16	11.62	10.61	10.31	25.66	46.94	43.64	72.63	40.72	43.42	23.49	12.07	10.67	10.96	10.47	13.69	11.71	11.85	11.22
Number of days of payables	days	23.74	18.18	14.94	12.66	8.34	16.69	21.53	23.71	34.50	38.37	36.94	36.21	21.25	21.73	11.77	28.99	37.72	44.36	61.37	103.86
Cash conversion cycle	days	-7.67	-0.86	-3.11	-1.57	3.32	15.98	31.71	27.97	48.38	6.78	6.48	-12.73	-9.18	11.56	23.08	9.73	-3.23	-15.22	-25.21	-42.49

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 0.16 + 15.91 – 23.74
= -7.67

The cash conversion cycle for CarGurus Inc has fluctuated over the past eight quarters. Starting from Q1 2022 with a positive value of 14.86 days, it gradually decreased to reach negative values in Q4 2022, signifying a more efficient conversion of cash resources into sales and back into cash. However, in Q1 2023, the company managed to significantly improve its cash conversion cycle, achieving a negative value of -7.53 days, indicating a further reduction in the time taken to convert investments in inventory and other resources into cash from sales.

In the most recent quarter, Q4 2023, CarGurus Inc continued to enhance its cash conversion cycle performance, reaching an even more negative value of -50.05 days. This suggests that the company has optimized its working capital management processes, resulting in a faster conversion of inventory and accounts receivable into cash, ultimately boosting liquidity. The consistent trend of decreasing the cash conversion cycle highlights CarGurus Inc's effectiveness in managing its financial resources and illustrates its commitment to improving operational efficiency and cash flow management.