KAR Auction Services Inc (KAR)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — | 17.64 | 12.80 | 13.86 | 22.75 | 11.04 | — | 644.74 | 7.24 | 14.69 | 14.89 | 15.70 | 17.10 | 14.74 | 12.71 | 25.81 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 17.64 | 12.80 | 13.86 | 22.75 | 11.04 | 0.00 | 644.74 | 7.24 | 14.69 | 14.89 | 15.70 | 17.10 | 14.74 | 12.71 | 25.81 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + — – —
= 0.00
The cash conversion cycle of KAR Auction Services Inc has shown fluctuations over the past few years, ranging from as low as 0 days to as high as 644.74 days as of March 31, 2022. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
The trend in the cash conversion cycle indicates how efficiently the company manages its working capital. A lower cycle implies that the company is able to collect payments from its customers faster and/or manage its inventory efficiently. Conversely, a higher cycle suggests that the company may be facing challenges in collecting payments or managing its inventory effectively.
In the case of KAR Auction Services Inc, the cycle has exhibited significant fluctuations, with some periods showing exceptionally low or even zero days, indicating a very efficient working capital management. However, there are also instances where the cycle increased significantly, peaking at 644.74 days in March 2022, which might raise concerns about the company's operational efficiency.
It is crucial for KAR Auction Services Inc to closely monitor and manage its cash conversion cycle to ensure optimal utilization of resources and maintain healthy cash flows. Analyzing the reasons behind the fluctuations in the cycle can provide insights into areas that require improvement, such as inventory management, accounts receivable collection, or payment terms negotiation with customers and suppliers.
Peer comparison
Dec 31, 2024