Lithia Motors Inc (LAD)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	30,878,400	28,126,000	22,726,200	13,069,400	12,624,200
Total current assets	US$ in thousands	6,955,200	4,630,900	3,309,700	3,339,900	3,070,500
Total current liabilities	US$ in thousands	4,932,200	3,178,200	2,402,800	2,479,700	2,569,100
Working capital turnover		15.26	19.36	25.06	15.19	25.18

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $30,878,400K ÷ ($6,955,200K – $4,932,200K)
= 15.26

Lithia Motors, Inc. has shown varying trends in its working capital turnover ratio over the past five years. The working capital turnover ratio indicates how efficiently the company is utilizing its working capital to generate sales revenue.

In 2019, the ratio was relatively high at 25.27, suggesting that the company was able to generate sales revenue 25.27 times using its working capital during that year. However, this ratio decreased in 2020 to 15.30, indicating a less efficient use of working capital to generate sales revenue.

There was a slight improvement in 2021 with a working capital turnover of 20.20, signaling that the company was able to generate more sales revenue relative to its working capital compared to the previous year.

However, over the next two years (2022 and 2023), the working capital turnover ratio continued to decline to 19.40 and 15.34, respectively. This downward trend could suggest potential inefficiencies in managing working capital or challenges in generating sales revenue efficiently.

Overall, the decreasing trend in working capital turnover over the past five years highlights the importance of monitoring and managing working capital effectively to enhance operational efficiency and financial performance in the years to come.