Lithia Motors Inc (LAD)

Days of inventory on hand (DOH)

		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
DOH	days	62.29	59.16	47.39	41.10	73.19

December 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 5.86
= 62.29

Lithia Motors Inc's days of inventory on hand (DOH) have shown a declining trend over the past five years. As of December 31, 2020, the company had an average of 73.19 days of inventory on hand, indicating a relatively high level of inventory relative to its sales.

However, there has been a notable improvement in managing inventory levels as of December 31, 2021, with the DOH decreasing to 41.10 days. This suggests that the company has been more efficient in managing its inventory, possibly through better inventory control or faster inventory turnover.

Subsequently, the DOH increased slightly to 47.39 days by December 31, 2022, indicating a potential slowdown in inventory management efficiency compared to the previous year. This was followed by a further increase to 59.16 days by December 31, 2023, and 62.29 days by December 31, 2024, suggesting a trend of slightly increasing inventory levels.

Overall, while there have been fluctuations in Lithia Motors Inc's DOH over the years, it is important for the company to strike a balance between maintaining adequate inventory levels to meet customer demand and avoiding excess inventory that could tie up capital and increase holding costs. Monitoring and optimizing the DOH can help the company improve operational efficiency and profitability in the long run.