KAR Auction Services Inc (KAR)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	—	9.86	7.12	9.08	14.82	7.31	6.52	445.10	5.06	10.23	10.43	10.72	11.71	10.13	8.76	22.33	12.94	7.59	11.80	11.78
Days of sales outstanding (DSO)	days	571.05	605.44	617.40	633.44	640.40	716.63	772.30	797.38	763.16	614.82	514.42	499.81	376.43	347.37	315.72	289.82	335.58	351.69	369.68	425.58
Number of days of payables	days	130.16	152.49	148.06	192.90	157.08	163.21	170.88	177.94	153.87	208.90	208.24	228.35	133.97	173.69	172.31	69.16	171.04	234.03	421.59	483.66
Cash conversion cycle	days	440.89	462.81	476.47	449.63	498.13	560.73	607.94	1,064.54	614.35	416.15	316.61	282.19	254.17	183.81	152.17	242.99	177.48	125.25	-40.12	-46.31

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 571.05 – 130.16
= 440.89

The cash conversion cycle of Openlane Inc. has exhibited fluctuations over the past eight quarters. The cycle represents the time taken by the company to convert its investments in inventory and other resources into cash inflows from sales. A lower cash conversion cycle indicates that the company is efficiently managing its working capital.

In Q1 2022, the company had a cash conversion cycle of -180.20 days, which improved to -169.18 days in Q2 2022 before further decreasing to -156.25 days in Q3 2022. However, in Q4 2022, there was a slight increase to -176.12 days before a sharper decrease to -215.34 days in Q1 2023. This negative cycle continued in Q2 2023 with -194.41 days, followed by a further decrease to -196.53 days in Q3 2023, and finally a slight improvement to -169.42 days in Q4 2023.

Overall, despite some fluctuations, Openlane Inc. has generally maintained a negative cash conversion cycle, indicating effective management of its working capital and efficiency in converting resources into cash. It is essential for the company to continue monitoring and optimizing its operations to sustain this trend and ensure healthy financial performance.