Lithia Motors Inc (LAD)

Days of sales outstanding (DSO)

		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
Receivables turnover		29.03	28.59	27.01	25.94	27.47	30.20	33.01	33.62	34.54	27.30	26.90	27.16	24.98	25.08	22.31	19.71	21.29	24.14	27.07	42.13
DSO	days	12.57	12.77	13.51	14.07	13.29	12.09	11.06	10.86	10.57	13.37	13.57	13.44	14.61	14.56	16.36	18.52	17.15	15.12	13.48	8.66

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 29.03
= 12.57

The Days Sales Outstanding (DSO) ratio for Lithia Motors Inc provides insights into the company's efficiency in collecting accounts receivable from customers. A lower DSO indicates quicker collection of receivables, which is generally favorable as it represents a faster conversion of sales into cash.

Analyzing the trend in Lithia Motors Inc's DSO over the reported periods from March 31, 2020, to December 31, 2024, reveals fluctuations in the collection efficiency. The DSO increased from 8.66 days as of March 31, 2020, to a peak of 18.52 days on March 31, 2021, signifying a potential delay in collecting receivables during that period.

Subsequently, there was a downward trend in DSO from June 30, 2021, to December 31, 2024, indicating improvements in the company's accounts receivable collection process. The DSO decreased to a low of 10.57 days on December 31, 2022, before slightly increasing to 14.07 days on March 31, 2024.

Overall, the declining trend in DSO post-March 31, 2021, suggests that Lithia Motors Inc has been managing its accounts receivable more efficiently, potentially enhancing cash flow and liquidity. However, the slight uptick in DSO as of March 31, 2024, warrants continued monitoring to ensure that the company maintains an optimal balance between timely collections and customer relationships.