Group 1 Automotive Inc (GPI)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	42.60	32.88	31.07	51.27	59.40
Days of sales outstanding (DSO)	days	4.90	4.51	4.84	6.78	6.87
Number of days of payables	days	10.83	11.83	13.26	15.26	16.48
Cash conversion cycle	days	36.67	25.56	22.66	42.80	49.79

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 42.60 + 4.90 – 10.83
= 36.67

Group 1 Automotive, Inc.'s cash conversion cycle has shown fluctuations over the past five years. A shorter cash conversion cycle indicates that the company is efficiently managing its working capital.

In 2023, the cash conversion cycle increased to 48.39 days from 34.66 days in 2022, indicating a potential decrease in efficiency in managing cash flows and working capital requirements. However, this could be a temporary situation.

In 2021, the cash conversion cycle was the lowest at 31.09 days, reflecting a strong performance in terms of converting its resources into cash. This suggests that the company was quickly able to convert its inventory into sales and then collect cash from customers.

The increase in the cash conversion cycle to 55.04 days in 2020, compared to 31.09 days in 2021, indicates a lengthening of the time it takes for Group 1 Automotive to convert its investments in inventory and other resources into cash flows from sales.

Overall, Group 1 Automotive, Inc. should focus on managing its working capital efficiently to optimize its cash conversion cycle and ensure a healthy cash flow generation process.