Lithia Motors Inc (LAD)

Working capital turnover

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Revenue (ttm)	US$ in thousands	30,848,600	30,176,800	29,204,400	28,342,500	28,084,900	27,422,400	26,318,100	25,093,700	22,727,900	20,377,000	17,838,800	14,600,400	13,069,800	12,354,800	12,083,600	12,562,400	12,624,200	12,377,000	12,136,600	12,011,400
Total current assets	US$ in thousands	6,955,200	5,818,200	5,494,000	5,147,700	4,630,900	4,682,300	4,161,800	3,884,600	3,309,700	3,075,500	3,870,800	3,288,900	3,339,900	2,750,400	2,430,100	2,925,800	3,070,500	2,929,900	3,031,500	3,027,900
Total current liabilities	US$ in thousands	4,932,200	4,375,300	4,048,200	3,948,000	3,178,200	2,826,600	2,614,400	2,825,100	2,402,800	2,181,800	2,595,800	2,610,900	2,479,700	2,212,400	2,026,400	2,431,500	2,569,100	2,483,400	2,605,300	2,585,200
Working capital turnover		15.25	20.91	20.20	23.62	19.33	14.78	17.01	23.68	25.06	22.80	13.99	21.53	15.19	22.96	29.93	25.41	25.18	27.72	28.48	27.13

December 31, 2023 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $30,848,600K ÷ ($6,955,200K – $4,932,200K)
= 15.25

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales revenue. A higher working capital turnover ratio indicates that the company is effectively managing its working capital and turning it into revenue quickly.

Based on the data provided for Lithia Motors, Inc., we can see fluctuations in the working capital turnover ratio over the past eight quarters. In Q4 2023, the working capital turnover ratio was 15.34, which was lower compared to the previous quarter Q3 2023 (21.01). This decrease may indicate a decrease in the efficiency of the company in utilizing its working capital to generate sales revenue during Q4 2023.

However, when we compare the latest ratio to Q1 2023 and Q4 2022, we can observe an improvement in efficiency. The working capital turnover ratio increased from 23.72 in Q1 2023 and 19.40 in Q4 2022 to 15.34 in Q4 2023. This signifies a positive trend in the company's ability to generate revenue using its working capital effectively over the longer term.

On a quarterly basis, Lithia Motors, Inc. has experienced fluctuations in its working capital turnover ratio, with some quarters demonstrating higher efficiency than others. It is essential for the company to consistently monitor and manage its working capital to ensure optimal efficiency in generating sales revenue.