Lithia Motors Inc (LAD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.86 | 6.17 | 7.70 | 8.88 | 4.99 |
| Receivables turnover | 29.07 | 27.49 | 34.59 | 24.97 | 21.29 |
| Payables turnover | 103.80 | 101.85 | 101.62 | 90.00 | 78.58 |
| Working capital turnover | 29.66 | 15.40 | 19.36 | 25.06 | 15.19 |
Lithia Motors Inc's inventory turnover ratio has shown improvement over the years, indicating that the company is managing its inventory more efficiently. The ratio increased from 4.99 in 2020 to 8.88 in 2021 but has since slightly decreased to 5.86 by the end of 2024. This suggests that the company is selling its inventory at a faster rate compared to previous years, which can lead to better liquidity and profitability.
In terms of receivables turnover, Lithia Motors Inc has experienced fluctuations in its efficiency in collecting receivables from customers. The ratio jumped from 21.29 in 2020 to 34.59 in 2022, indicating a significant improvement in managing receivables. However, there was a slight decline in 2023 and 2024, with the ratio settling at 29.07 by the end of 2024. This trend suggests that the company may need to focus on optimizing its accounts receivable collection processes.
The payables turnover ratio for Lithia Motors Inc has been relatively stable over the years, consistently increasing from 78.58 in 2020 to 103.80 in 2024. A higher payables turnover ratio generally signifies that the company is managing its payables efficiently by quickly paying its suppliers. This can help improve cash flow and liquidity within the business.
When looking at the working capital turnover ratio, Lithia Motors Inc has shown varying efficiency in generating revenue from its working capital. The ratio saw a significant increase from 15.19 in 2020 to 25.06 in 2021, indicating that the company was able to generate more revenue using its working capital. Although there was a drop in 2023, the ratio surged to 29.66 by the end of 2024, suggesting that the company has been able to effectively utilize its working capital to drive sales.
Overall, the analysis of Lithia Motors Inc's activity ratios highlights the company's efforts to manage its inventory, receivables, payables, and working capital efficiently to enhance operational performance and financial health.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 62.29 | 59.16 | 47.39 | 41.10 | 73.19 |
| Days of sales outstanding (DSO) | days | 12.55 | 13.28 | 10.55 | 14.62 | 17.15 |
| Number of days of payables | days | 3.52 | 3.58 | 3.59 | 4.06 | 4.64 |
Lithia Motors Inc's activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows improvement from 73.19 days in 2020 to 62.29 days in 2024.
- A decreasing trend in DOH signifies that the company is selling its inventory at a faster rate, which is positive for cash flow and reducing holding costs.
2. Days of Sales Outstanding (DSO):
- DSO improved from 17.15 days in 2020 to 12.55 days in 2024.
- A lower DSO indicates that the company is collecting its receivables more quickly, improving cash flow and reducing the risk of bad debts.
3. Number of Days of Payables:
- The number of days of payables decreased steadily from 4.64 days in 2020 to 3.52 days in 2024.
- A lower number of days of payables suggests that the company is managing its payments to suppliers efficiently, potentially benefiting from discounts for early payments.
Overall, the improving trends in these activity ratios show that Lithia Motors Inc has been effectively managing its inventory levels, collecting receivables faster, and optimizing payment terms with suppliers, which can lead to better working capital management and operational efficiency.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.02 | 8.02 | 8.04 | 6.65 | 5.95 |
| Total asset turnover | 1.57 | 1.57 | 1.87 | 2.04 | 1.65 |
Lithia Motors Inc's fixed asset turnover has shown a positive trend over the years, increasing from 5.95 in 2020 to 8.02 in both 2023 and 2024. This indicates that the company is generating more revenue from its fixed assets, reflecting efficient utilization of these assets to generate sales.
In contrast, the total asset turnover ratio has been somewhat volatile, peaking at 2.04 in 2021 and then declining to 1.57 by the end of 2023 and remaining at that level until 2024. This suggests that the company's total assets may not be as efficiently employed to generate revenue compared to the fixed assets.
Overall, while Lithia Motors Inc has shown improvement in its fixed asset turnover efficiency, the total asset turnover ratios indicate a potential room for optimization in utilizing all assets effectively to generate sales.