Copart Inc (CPRT)
Liquidity ratios
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 7.03 | 6.62 | 5.00 | 4.04 | 2.71 |
| Quick ratio | 6.69 | 6.24 | 4.57 | 3.68 | 2.40 |
| Cash ratio | 5.44 | 4.80 | 3.14 | 2.49 | 1.34 |
Copart Inc's liquidity ratios have shown a consistent improvement over the past five years, indicating the company's ability to meet its short-term obligations.
The current ratio, which measures the company's ability to pay its short-term liabilities with its current assets, has steadily increased from 2.71 in 2020 to 7.03 in 2024. This indicates that Copart has significantly strengthened its liquidity position and is in a better position to cover its short-term debts.
The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. Similarly to the current ratio, the quick ratio has shown a positive trend, increasing from 2.40 in 2020 to 6.69 in 2024. This suggests that Copart has a sufficient level of liquid assets to cover its short-term liabilities without relying on selling inventory.
The cash ratio, which indicates the company's ability to cover its short-term liabilities with cash and cash equivalents, has also improved consistently over the years. The ratio has increased from 1.34 in 2020 to 5.44 in 2024, indicating that Copart has a stronger ability to meet its obligations with readily available cash.
Overall, the increasing trend in all three liquidity ratios suggests that Copart Inc has been effectively managing its liquidity position and is well-positioned to meet its short-term financial obligations.
Additional liquidity measure
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 47.18 | 44.20 | 44.09 | 40.55 | 28.00 |
The cash conversion cycle of Copart Inc has shown a fluctuating trend over the past five years. It increased from 28.00 days in July 2020 to 47.18 days in July 2024, indicating a lengthening period for the company to convert its investments in inventory and accounts receivable into cash. The cycle reached its peak in July 2024 compared to the previous years. This may suggest potential challenges in managing working capital efficiently, impacting the company's liquidity and cash flow. Further analysis of the components contributing to the cash conversion cycle, such as accounts receivable turnover, inventory turnover, and accounts payable turnover, would provide additional insights into the company's operational efficiency and financial performance.