Copart Inc (CPRT)

The receivables turnover ratio measures how efficiently a company is managing its accounts receivable by comparing the amount of credit sales to the average accounts receivable during a period. A higher receivables turnover ratio indicates that the company is collecting its receivables more efficiently.

Looking at Copart, Inc.'s receivables turnover over the past five years, we observe a consistent range between 5.28 and 5.85. This indicates that the company has been effective in collecting its outstanding receivables relative to its credit sales.

The slight fluctuations in the receivables turnover ratio over the years are normal and may be influenced by various factors such as changes in credit policies, customer payment behavior, and overall economic conditions. However, the overall stability of the ratio suggests that Copart has been successful in managing its accounts receivable turnover.

It's important to note that while a high turnover ratio is generally positive, excessively high turnover may indicate a very strict credit policy that could potentially result in lost sales. On the other hand, a low turnover ratio could suggest inefficiencies in collections or an overly lenient credit policy.

In the case of Copart, the average turnover ratio of around 5.5 over the past five years indicates effective management of receivables without being overly restrictive. This consistent performance suggests that the company has struck a good balance between collecting outstanding receivables efficiently and not jeopardizing potential sales opportunities.

Peer comparison

Jul 31, 2023