Copart Inc (CPRT)

Based on the provided data, Copart, Inc.'s liquidity ratios have shown consistent improvement over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has increased from 2.44 in 2019 to 6.62 in 2023. This indicates a substantial improvement in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a positive trend, increasing from 2.36 in 2019 to 6.54 in 2023. This suggests that the company has a strong ability to meet its short-term obligations without relying on selling inventory.

The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also exhibited significant improvement, rising from 0.99 in 2019 to 5.10 in 2023. This demonstrates a substantial increase in the company's capacity to cover its short-term obligations with its readily available cash resources.

Overall, these liquidity ratios indicate that Copart, Inc. has experienced consistent improvement in its ability to meet its short-term financial obligations and suggests a strong and improving liquidity position over the past five years.

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Additional liquidity measure

The cash conversion cycle (CCC) of Copart, Inc. has exhibited both positive and negative trends over the past five years. The CCC was -16.34 days as of July 31, 2023, indicating that the company's operating cycle led to a negative duration in which it had converted its investments in inventory and other resources into cash. This suggests that Copart has been efficient in managing its working capital and converting its investments into cash.

Comparing this to previous years, the improvement in the CCC is notable, as it was -14.55 days in 2022, -56.85 days in 2021, -120.43 days in 2020, and -63.72 days in 2019. The significant decrease in the CCC from 2020 to 2021 and the subsequent improvement in 2023 indicate a positive trend in the company's operations.

The negative CCC means that Copart has been able to collect cash from customers before paying its suppliers, which can be indicative of strong customer payment terms and efficient inventory management. Overall, the trend in the CCC suggests that Copart has been successful in converting its investment in inventory into cash in a relatively shorter period, ultimately contributing to its liquidity and financial performance.