Lithia Motors Inc (LAD)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	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	111.73	83.11	86.31	87.42
Days of sales outstanding (DSO)	days	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	14.60	13.56	14.71	14.92
Number of days of payables	days	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	5.75	4.42	4.59	4.27
Cash conversion cycle	days	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	120.58	92.25	96.43	98.07

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.17 + 13.29 – 3.58
= 68.87

The cash conversion cycle of Lithia Motors, Inc. has shown fluctuations over the past eight quarters. The cycle indicates the time it takes for the company to convert its investments in inventory and other resources into cash flow from sales.

In the most recent quarter of Q4 2023, the cash conversion cycle was 76.35 days, representing an increase compared to the previous quarter. This suggests that the company took longer to convert its investments into cash during this period.

Comparing the Q4 data across the years, there is a consistent trend of increasing days in the cash conversion cycle. This could indicate potential issues in managing inventory, collecting receivables, or paying suppliers efficiently.

On the positive side, Lithia Motors saw a notable improvement in its cash conversion cycle from Q1 2022 to Q4 2022, where there was a decrease from 57.04 days to 60.46 days. This improvement indicates that the company became more efficient in managing its working capital during that period.

Overall, the analysis of Lithia Motors' cash conversion cycle over the past eight quarters highlights the importance of monitoring working capital management to ensure optimal operational efficiency and cash flow generation.