Copart Inc (CPRT)

The analysis of Copart Inc’s cash conversion cycle (CCC) over the observed period reveals notable fluctuations with an underlying trend toward elongation followed by a significant turnaround.

Between July 31, 2021, and July 31, 2024, the CCC exhibited a gradual increase. Specifically, it rose from 35.88 days in 2021 to 40.79 days in 2022, indicating that the company required more days to convert its investments in inventory and receivables into cash over that period. Subsequently, the CCC extended further to 42.87 days in 2023 and reached 44.25 days in 2024. This progressive increase suggests a lengthening of either the days inventory outstanding, receivable collection period, or a combination of these components, implying a slower overall operating cycle.

However, the data for July 31, 2025, reveals an extraordinary shift, with the CCC dropping to -19.16 days. A negative cash conversion cycle indicates that the company can generate cash from sales before it needs to pay its suppliers, effectively implying that it holds favorable terms or efficiently manages its working capital components.

This trend indicates a period of operational expansion or strategic changes leading to a lengthening of the operating cycle, followed by a significant improvement in liquidity management or payment terms, resulting in a negative CCC. The overall dynamics reflect a transition from a more extended cycle to a highly efficient working capital management position, demonstrating an exceptional ability to generate cash promptly relative to the period of inventory and receivables.