Copart Inc (CPRT)

Short-term

Turnover ratios

The activity ratios of Copart Inc, as captured over the period from July 2021 to July 2025, exhibit notable trends indicative of changing operational efficiency and asset management.

Inventory Turnover: This ratio demonstrates a steady upward trajectory, increasing from 30.01 in July 2021 to 64.23 in July 2025. The significant acceleration observed after July 2022 suggests a progressively more effective inventory management system, leading to faster inventory cycles and potentially lower holding costs. The roughly doubling of the ratio over this period indicates an enhanced ability to convert inventory into sales rapidly.

Receivables Turnover: The receivables turnover ratio exhibits relative stability, with values around 5.38 to 5.57 from July 2021 to July 2023. There is a minor increase to 6.09 by July 2025, implying a slight improvement in the company’s collection efficiency and shorter credit periods extended to customers over time. This consistency suggests disciplined credit policies with marginal gains in receivables management.

Payables Turnover: This ratio displays an increasing trend from 8.27 in July 2021 to a peak of 12.05 in July 2024, reflecting that the company is paying its suppliers more frequently relative to its purchases, potentially indicating improved cash flow management or a shift to shorter payment terms. However, a notable decline to 4.30 in July 2025 suggests a significant change—possibly delayed payments or restructuring of payment terms—leading to decreased turnover and longer accounts payable periods.

Working Capital Turnover: The ratio shows a consistent decline over the period, from 2.10 in July 2021 to 0.94 in July 2025. This declining trend suggests that the company is generating less sales per unit of working capital employed, which may imply diminishing efficiency in utilizing working capital or a strategic change in operational focus that affects asset utilization.

Overall, the data indicates that Copart Inc has enhanced its inventory management efficiency substantially, maintaining stable receivables collection periods, while experiencing fluctuations in payables management—particularly a decrease in payables turnover in 2025—and a continued decline in working capital efficiency. These trends should be considered in the context of broader operational strategies and market conditions.

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Average number of days

The provided activity ratios for Copart Inc. over the period from July 2021 to July 2025 indicate notable trends in inventory management, accounts receivable collection, and accounts payable practices.

Days of Inventory on Hand (DOH): The data reflects a steady decline in inventory holding periods, from 12.16 days in 2021 to 5.68 days projected for 2025. This reduction suggests an increasing efficiency in inventory turnover, potentially attributable to improved inventory management systems, higher inventory turnover rates, or a shift toward a leaner inventory model. The significant decrease between 2023 and 2025 demonstrates a continuous effort to minimize inventory levels, which can lead to reduced carrying costs and improved cash flow.

Days of Sales Outstanding (DSO): The DSO figures fluctuate within a relatively narrow range, starting at 67.87 days in 2021 and slightly decreasing to an estimated 59.96 days in 2025. Although there is some variability, the overall trend indicates a marginal improvement in the collection of accounts receivable over the period. This suggests that Copart has maintained a consistent credit collection process, with a slight enhancement in receivables turnover that could contribute positively to liquidity management.

Number of Days of Payables: The data shows a decreasing trend in days payable, from 44.15 days in 2021 down to 30.81 days in 2023, implying that the company was paying its suppliers more promptly during this period. However, a sharp increase to 84.80 days is projected for 2025, indicating a significant elongation in repayment periods. This extension could be a strategic effort to optimize cash flow by delaying payments, but it also entails potential risks such as strained supplier relationships or penalty costs if the delayed payments violate contractual terms.

In sum, the activity ratios suggest that Copart Inc. has been actively refining its operational efficiency. The substantial reduction in inventory days coupled with maintained or improved receivables collection indicates enhanced operational liquidity. The evolving payables pattern points toward a strategic approach to working capital management, balancing the benefits of extended payment terms against the risks associated with delayed payments. These trends collectively portray a company focused on maximizing working capital efficiency and operational responsiveness.

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Long-term

The analysis of Copart Inc.'s long-term activity ratios reveals varying trends over the observed period. The fixed asset turnover ratio, which measures the efficiency of utilizing fixed assets to generate sales, increased from 1.11 as of July 31, 2021, to 1.35 as of July 31, 2022. Subsequently, it slightly declined to 1.32 by July 31, 2023. The absence of data beyond this point precludes further trend assessment. Overall, the initial increase indicates improved utilization of fixed assets in 2022, with a minor decline in 2023 suggesting a stabilization or slight reduction in fixed asset efficiency.

Regarding the total asset turnover ratio, which assesses the overall effectiveness of asset utilization in generating sales, there was an increase from 0.59 in 2021 to 0.66 in 2022. However, a decrease is observed in 2023, with the ratio falling to 0.57, and further declines are projected for subsequent years to 0.50 in 2024 and 0.46 in 2025. This downward trend signifies a decreasing efficiency in asset utilization over time, indicating that the company is generating less revenue per dollar of total assets as the years progress.

In summary, while Copart demonstrated improvements in fixed asset efficiency up to 2022, its overall asset utilization has been deteriorating since that period, suggesting potential shifts in operational efficiency or asset composition affecting long-term activity ratios.