Lithia Motors Inc (LAD)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	62.29	67.09	70.76	69.07	59.17	56.25	56.70	52.84	47.39	47.37	44.62	42.29	41.10	38.49	48.73	61.50	73.19	89.06	81.05	111.00
Days of sales outstanding (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
Number of days of payables	days	3.52	3.31	4.31	3.86	3.58	3.92	3.95	4.39	3.59	3.45	3.98	4.08	4.06	4.74	5.57	5.26	4.64	6.28	5.58	4.81
Cash conversion cycle	days	71.35	76.54	79.96	79.28	68.87	64.41	63.81	59.31	54.37	57.29	54.20	51.65	51.66	48.30	59.52	74.76	85.70	97.90	88.95	114.86

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 62.29 + 12.57 – 3.52
= 71.35

The cash conversion cycle of Lithia Motors Inc provides insight into how efficiently the company manages its cash flows related to its operating cycle. Over the period from March 31, 2020, to December 31, 2024, the trend reflects improvements in the efficiency of the company's cash conversion cycle.

The cash conversion cycle decreased from 114.86 days on March 31, 2020, to 71.35 days on December 31, 2024. This reduction indicates that the company has been able to optimize its cash management processes, which typically involve the time it takes to sell inventory, collect receivables, and pay suppliers.

Notable fluctuations were observed in the cash conversion cycle, with some periods showing more significant improvements, such as the substantial decrease from 114.86 days on March 31, 2020, to 59.52 days on June 30, 2021. However, there were also slight increases in the cycle observed in some periods, suggesting potential fluctuations in operating efficiency.

Overall, the decreasing trend in the cash conversion cycle over the period signifies enhanced operational efficiency in managing cash flows, which is a positive indicator of effective working capital management for Lithia Motors Inc.