Copart Inc (CPRT)

The liquidity ratios of Copart Inc. reflect a notably strong and improving liquidity position over the specified period from July 31, 2021, to July 31, 2025.

The current ratio demonstrates a consistent upward trend, increasing from 4.04 in 2021 to 8.25 in 2025. This ratio indicates that the company's current assets have grown substantially relative to its current liabilities, suggesting an ample short-term liquidity cushion that enhances its ability to meet short-term obligations comfortably.

Similarly, the quick ratio, which excludes inventory from current assets to focus on more liquid assets, shows an upward progression from 3.68 in 2021 to 8.13 in 2025. The rapid increase signifies an improving capacity to settle short-term liabilities with the most liquid assets, further reinforcing the company's strong liquidity stance.

The cash ratio, representing the proportion of current liabilities covered by cash and cash equivalents, has also exhibited significant growth—from 2.49 in 2021 to 7.01 in 2025. This escalation indicates that Copart’s cash holdings in relation to its current liabilities have substantially increased, providing a robust buffer for immediate obligations.

Overall, these ratios collectively illustrate a positive trajectory of liquidity enhancement, characterized by increasing adequacy of current assets, quick assets, and cash holdings relative to current liabilities. Such trends underscore the company's liquidity strength and its capacity to efficiently meet short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle (CCC) of Copart Inc. demonstrates a variable trend over the period from July 31, 2021, to July 31, 2025. Initially, the CCC increased from approximately 35.88 days in 2021 to 40.79 days in 2022, indicating a slight elongation in the time it takes for the company to convert investments in inventory and other resources into cash flows. Continuing this trend, the CCC in 2023 further lengthened to approximately 42.87 days, suggesting a gradual delay in cash realizations from core operations.

The upward trajectory persisted into 2024, where the CCC reached about 44.25 days, reflecting an ongoing trend of increased days to collect cash from sales, which could be associated with changes in operational efficiencies, receivables management, or inventory turnover. Interestingly, by July 31, 2025, the CCC markedly shifted into negative territory at approximately -19.16 days. A negative CCC implies that the company is able to convert its investments into cash faster than it needs to pay its suppliers or fulfill operational obligations, effectively collecting receivables before disbursing cash for inventories or operational expenses.

This trend indicates an evolving working capital management dynamic in Copart Inc., transitioning from a period of gradually increasing operational cycle length to a phase where operational cash flows are effectively ahead of payment obligations, enhancing liquidity and operational flexibility. Such a significant change warrants additional scrutiny into the company's receivables collection practices, supplier payment terms, and overall operational strategy, as a negative CCC can be indicative of optimized cash flows or, alternatively, shortened payment windows that might impact supplier relationships.

In summary, the data reflects a notable shift from a positive and gradually increasing cash conversion cycle to a negative one over the four-year span, signaling improved timing in cash flows relative to operational liabilities by the end of July 2025.