KAR Auction Services Inc (KAR)

Liquidity ratios

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
Current ratio 1.15 1.17 1.17 1.15 1.14 1.14 1.13 1.23 1.13 1.28 1.27 1.33 1.41 1.56 1.62 1.34 1.29 1.29 1.14 1.17
Quick ratio 1.08 1.12 1.12 1.10 1.09 1.10 1.10 0.74 1.07 1.23 1.23 1.29 1.34 1.48 1.53 1.22 1.22 1.24 1.08 1.09
Cash ratio 0.04 0.04 0.09 0.08 0.09 0.05 0.23 0.03 0.06 0.24 0.25 0.30 0.33 0.54 0.48 0.15 0.20 0.20 0.09 0.09

The liquidity ratios of Openlane Inc. provide insights into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has remained relatively stable over the quarters, ranging from 1.13 to 1.17. A ratio above 1 indicates that Openlane Inc. has more current assets than current liabilities, suggesting a strong ability to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Openlane Inc.'s quick ratio has varied from 0.15 to 0.37, with a lower ratio indicating a higher dependency on inventory to meet short-term obligations. The fluctuation in the quick ratio may reflect changes in inventory management or the company's overall liquidity position.

The cash ratio, which measures the company's ability to cover short-term liabilities with cash and cash equivalents, has shown some fluctuation, ranging from 0.06 to 0.25. A higher cash ratio suggests a stronger liquidity position and a greater ability to cover short-term obligations without relying on other current assets.

Overall, while the current ratio indicates that Openlane Inc. has a sufficient level of current assets to cover its current liabilities, the quick and cash ratios reveal variations in the company's liquidity position over the quarters. It is essential for stakeholders to monitor these liquidity ratios closely to assess Openlane Inc.'s ability to meet its short-term financial obligations effectively.

Additional liquidity measure

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
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

The cash conversion cycle of Openlane Inc. has shown variability over the past eight quarters, with the cycle ranging from -215.34 days in Q1 2023 to -156.25 days in Q3 2022. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, as it is able to generate cash from its operations before needing to pay its suppliers.

Overall, the trend in the cash conversion cycle appears to have improved over the quarters, with a reduction in the number of days taken to convert inventory and accounts receivable into cash. This suggests that Openlane Inc. has been more effective in managing its inventory levels and collecting payments from customers in a timely manner.

However, it is worth noting that a very low or a negative cash conversion cycle may also indicate aggressive sales practices or overly lenient credit terms, which could pose risks in the long term. Therefore, it is important for the company to strike a balance between efficient working capital management and sustainable business practices to ensure long-term financial health.