Lithia Motors Inc (LAD)

Days of inventory on hand (DOH)

		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
Inventory turnover		5.86	5.44	5.16	5.28	6.17	6.49	6.44	6.91	7.70	7.70	8.18	8.63	8.88	9.48	7.49	5.93	4.99	4.10	4.50	3.29
DOH	days	62.29	67.09	70.76	69.07	59.17	56.25	56.70	52.84	47.39	47.37	44.62	42.29	41.10	38.49	48.73	61.50	73.19	89.06	81.05	111.00

December 31, 2024 calculation

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

The days of inventory on hand (DOH) for Lithia Motors Inc have shown a decreasing trend over the past few years. From March 31, 2020, where it stood at 111.00 days, the DOH decreased to 62.29 days by December 31, 2024. This indicates that the company has been more efficient in managing its inventory levels and converting inventory into sales during this period.

A lower DOH implies that the company is selling its inventory at a faster rate, which can lead to lower holding costs and potentially higher profitability due to reduced obsolescence and markdown risks. It also suggests that the company has effective inventory management practices in place.

However, it is important to note that having too low DOH levels can also indicate stockouts or missed sales opportunities. Therefore, while a decreasing trend in DOH is generally positive, it is crucial for Lithia Motors Inc to maintain a balance to ensure it has adequate inventory to meet customer demand while also optimizing working capital and operational efficiency.