Lithia Motors Inc (LAD)

Days of sales outstanding (DSO)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Receivables turnover		29.07	27.49	34.59	24.97	21.29
DSO	days	12.55	13.28	10.55	14.62	17.15

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 29.07
= 12.55

Lithia Motors Inc has shown a decreasing trend in days of sales outstanding (DSO) from 17.15 days as of December 31, 2020, to 14.62 days as of December 31, 2021. This improvement indicates the company's efficiency in collecting its accounts receivable within a shorter timeframe.

However, there was a further decline in DSO to 10.55 days as of December 31, 2022, reflecting a more rapid collection of sales revenues. This could be attributed to effective credit management practices or a higher proportion of cash sales.

Subsequently, the DSO increased slightly to 13.28 days as of December 31, 2023, but remained relatively low compared to the initial years. This uptick might signify a temporary slowdown in collections or changes in sales patterns.

As of December 31, 2024, the DSO stands at 12.55 days, still below the levels observed in the early years of the period under review. Overall, the declining trend in DSO indicates that Lithia Motors Inc has been successful in managing its accounts receivable efficiently, potentially improving its cash flow and overall liquidity position.