Copart Inc (CPRT)

Short-term

Turnover ratios

The analysis of Copart Inc.'s activity ratios over the specified period reveals several notable trends and insights:

Inventory Turnover:
This ratio generally exhibits an increasing trend, moving from 42.29 times at the end of October 2020 to a peak of approximately 64.23 times in July 2025. The elevated inventory turnover indicates that the company has improved its efficiency in converting inventory into sales, reducing holding periods and potentially lowering inventory-related costs. The steady upward trajectory suggests effective inventory management and a potentially high demand for its inventory assets.

Receivables Turnover:
The receivables turnover ratio shows relative stability with minor fluctuations, fluctuating roughly between 4.70 and 6.09 times. The ratio's slight increase toward the later periods—particularly around April 2025 and July 2025—may imply enhanced collections efficiency or a shift toward more favorable credit terms. The maintained or slightly improved receivables turnover reflects consistent management of accounts receivable, contributing positively to cash flow.

Payables Turnover:
This ratio displays more variability. Notably, there are significant spikes, such as reaching 10.12 times in July 2022 and 12.05 in July 2024, contrasting with periods of lower activity around 3.43 to 4.74. The elevated payables turnover during certain quarters suggests periods where the company paid its suppliers more quickly, which could be due to strategic payments to gain discounts or settle obligations promptly. Conversely, periods of lower turnover may indicate extended payment terms or delays. Overall, the fluctuations imply a dynamic approach to managing trade payables, possibly influenced by operational needs and supplier relationships.

Working Capital Turnover:
This ratio consistently declines over the period, decreasing from 3.07 in October 2020 to approximately 0.92 by July 2025. The downward trend indicates that the company is generating less sales or operating activity per dollar of working capital over time. This could suggest increasing levels of working capital relative to sales, possibly due to expansion, inventory buildup, or lagging sales growth. The declining efficiency in working capital utilization warrants monitoring, as it may impact liquidity and overall operational efficiency.

Summary:
Overall, Copart Inc. demonstrates strong inventory management capabilities with increasing turnover rates, indicative of high sales velocity relative to inventory levels. Receivables management remains relatively stable with slight improvements in recent periods. Fluctuations in payables turnover highlight strategic variability in supplier payments. The consistent decrease in working capital turnover suggests a need to monitor the efficiency of capital deployment, as it may reflect changing operational dynamics or market conditions. Collectively, these activity ratios portray an organization optimizing inventory and receivables management while facing evolving challenges in working capital utilization.

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Average number of days

The activity ratios of Copart Inc., as reflected in days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, demonstrate notable trends over the observed period from October 2020 through July 2025.

Inventory Turnover (Days of Inventory on Hand):
The DOH metric indicates the efficiency with which the company manages its inventory levels. The data reveal a decreasing trend in DOH over the period, starting at approximately 8.63 days in October 2020. A significant jump to around 12.16 days occurs in July 2021, possibly reflecting strategic inventory buildup or market conditions at that time. Subsequently, the DOH declines steadily, reaching roughly 6.84 days by July 2023, and fluctuating slightly thereafter, ultimately increasing moderately to about 8.67 days by January 2025. The overall trend suggests an improvement in inventory management efficiency, with the company holding less inventory relative to sales over time.

Receivables Collection Period (Days of Sales Outstanding):
The DSO figures exhibit a more volatile trend, with an initial value of approximately 66.49 days in October 2020. An upward movement peaks at around 77.62 days in January 2024, indicating a lengthening of the receivables collection cycle, possibly due to longer payment terms or slower collection processes. After this peak, a notable decrease is observed, with DSO reducing to approximately 59.92 days by July 2025, which signifies a potential improvement in receivables management and collection efficiency. This pattern suggests periodic fluctuations in the company's credit policies or customer payment behaviors but with recent signs of enhanced cash collection.

Payables Deferral Period (Days of Payables):
The number of days Copart Inc. takes to settle its payables has experienced considerable variability. Early in the period, payables days ranged around 109.96 days in October 2020 but decreased sharply to approximately 44.15 days in July 2021. This reduction indicates earlier payments or tighter credit terms during that period. Post-2021, the payables days fluctuate but generally trend downward, often around 30 days, reaching approximately 30.81 days in July 2023. Later, the metric swells again, peaking at approximately 88.25 days in October 2024, implying a strategic extension in payment terms or delayed payments during that interval. The recent data suggest periods of both aggressive and lenient payables management, with a tendency toward shorter payables periods in the most recent months.

Summary:
The activity ratios collectively indicate that Copart Inc. has generally improved its inventory management, reducing inventory levels relative to sales. The receivables collection cycle has experienced variability but shows signs of recent improvement by lowering DSO figures. The company's payables management has fluctuated considerably, with periods of both aggressive payment reductions and extensions, reflecting tactical adjustments in working capital management. Overall, these trends imply ongoing efforts to optimize cash conversion cycles, with recent data indicating more efficient collection and payables practices.

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Long-term

The long-term activity ratios of Copart Inc. reveal insights into the company's utilization efficiency of its fixed assets and total assets over the specified periods.

The Fixed Asset Turnover ratio has shown a general upward trend from 1.08 on October 31, 2020, to a peak of 1.39 on April 30, 2023. This indicates an increasing efficiency in generating sales relative to the company's fixed assets, reflecting potentially better asset management or investment in more productive fixed assets during this period. However, after reaching this peak, the ratio experienced a slight decline, dropping to 1.30 by October 31, 2023, suggesting a marginal reduction in fixed asset efficiency or increased investment in fixed assets that have yet to fully contribute to sales growth.

In contrast, the Total Asset Turnover ratio remained relatively stable but exhibited a gradual decline over time. Starting at 0.60 on October 31, 2020, it decreased steadily to 0.46 by July 31, 2025. This downward trajectory indicates that the company is generating less sales per dollar of total assets over time, which could be attributable to increased asset base that has not proportionately generated sales, or a strategic shift toward holding more assets that do not immediately impact sales figures.

Overall, while the Fixed Asset Turnover ratio suggests improving efficiency on fixed assets through early to mid-2023, the Total Asset Turnover's consistent decline signals a broader trend of declining overall asset utilization efficiency. This mixture of trends may warrant further analysis to determine whether increased assets are being deployed in less productive initiatives, or if operational changes are affecting sales relative to total asset base.