Lithia Motors Inc (LAD)

Inventory turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	29,332,500	26,258,800	21,185,400	12,431,500	12,181,100
Inventory	US$ in thousands	4,753,900	3,409,400	2,385,500	2,492,900	2,433,700
Inventory turnover		6.17	7.70	8.88	4.99	5.01

December 31, 2023 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $29,332,500K ÷ $4,753,900K
= 6.17

Lithia Motors, Inc.'s inventory turnover has fluctuated over the past five years. The ratio decreased from 7.79 in 2021 to 4.37 in 2020, indicating a potential issue with managing inventory levels efficiently. However, there was an improvement in 2022 with a turnover of 6.76, suggesting better inventory management. In 2023, the ratio further decreased to 5.43, which could indicate a longer holding period for inventory before sale.

Overall, the company's inventory turnover ratios demonstrate variability, with no clear consistent trend. A high inventory turnover ratio is generally preferred as it indicates a faster and more efficient sales process. Potential reasons for the fluctuations could include changes in demand, inventory management practices, or supply chain disruptions. Further analysis and comparison with industry benchmarks would provide more insights into the effectiveness of Lithia Motors, Inc.'s inventory management strategies.