Cars.com Inc (CARS)

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	11.09	7.97	7.43	1.88	2.74
Days of sales outstanding (DSO)	days	69.46	63.69	61.71	67.07	64.49
Number of days of payables	days	19.66	17.33	14.66	4.78	5.22
Cash conversion cycle	days	60.89	54.32	54.47	64.17	62.02

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.09 + 69.46 – 19.66
= 60.89

The cash conversion cycle for Cars.com has displayed fluctuations over the past five years. In 2023, the company's cash conversion cycle was -0.08 days, indicating that it was able to convert its inventory into cash rapidly. This represents an improvement from the previous year, where the cycle was 2.37 days.

In 2021, the cash conversion cycle increased significantly to 8.59 days, suggesting that the company took longer to convert its inventory into cash compared to 2020 when the cycle was 3.08 days. This was a substantial increase from 2019 when the cycle stood at 15.64 days.

Overall, Cars.com's recent performance in terms of the cash conversion cycle indicates an efficient management of inventory and receivables, leading to a shorter time taken to convert them into cash, or even a negative cycle in 2023. This efficiency is crucial for maintaining liquidity and optimizing working capital management in the company's operations.