LKQ Corporation (LKQ)

Short-term

Turnover ratios

LKQ Corporation's activity ratios provide insights into how efficiently the company is managing its assets and working capital.

1. Inventory Turnover: Over the five-year period, LKQ's inventory turnover has shown a consistent performance, fluctuating between 2.66 and 2.97. This indicates that the company is able to sell and replace its inventory approximately 2.7 to 3 times a year. A stable inventory turnover reflects effective inventory management and helps in preventing obsolete stock.

2. Receivables Turnover: The data shows that receivables turnover information is missing for all the years provided. This suggests that there might be limited information available or that receivables turnover is not a significant metric for the company's operations.

3. Payables Turnover: Similar to receivables turnover, payables turnover information is not provided for any of the years. Payables turnover could have indicated how efficiently the company is managing its payable obligations to suppliers.

4. Working Capital Turnover: LKQ's working capital turnover has shown an increasing trend from 5.68 in 2020 to 7.02 in 2024, peaking at 8.95 in 2023. A higher working capital turnover ratio signifies that the company is generating more revenue per dollar of working capital invested. This indicates an efficient utilization of working capital to generate sales and can be considered a positive trend.

In summary, LKQ Corporation has shown stable inventory turnover, a lack of data on receivables and payables turnover, and an increasing trend in working capital turnover over the five-year period. This analysis suggests that the company has been effectively managing its inventory and working capital to generate sales efficiently, though a more comprehensive dataset would be needed to evaluate its receivables and payables management.

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Average number of days

The activity ratios for LKQ Corporation indicate the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH):
- The inventory turnover for LKQ Corporation improved from 125.27 days as of December 31, 2020, to 122.69 days as of December 31, 2021. However, there was a slight increase in DOH to 132.67 days as of December 31, 2022, and a further increase to 137.40 days as of December 31, 2023, before decreasing to 134.41 days as of December 31, 2024.
- A lower DOH indicates faster inventory turnover and better management of inventory levels, which can lead to lower holding costs and reduced risk of obsolescence.

2. Days of Sales Outstanding (DSO):
- The data for DSO is not available for the years provided, indicating that specific information on the company's accounts receivable turnover and the average collection period is not given.
- DSO is a measure of how long it takes for a company to collect payments on sales, and a lower DSO typically implies more efficient credit and collection policies.

3. Number of Days of Payables:
- Similar to DSO, data on the number of days of payables is not provided in the dataset for the specified years.
- Monitoring the number of days of payables is crucial as it reflects how long a company takes to pay its suppliers, impacting its working capital management and relationships with vendors.

In summary, the analysis suggests that LKQ Corporation has shown fluctuations in its inventory turnover over the years, potentially indicating changes in its inventory management practices. However, additional information on DSO and payables is needed to provide a comprehensive assessment of the company's overall activity ratios and operational efficiency.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. In the case of LKQ Corporation, we observe a decline in the fixed asset turnover ratio from 9.31 in 2020 to 4.92 in 2021, suggesting a decrease in the company's ability to generate sales from its fixed assets during that period. However, the ratio shows significant improvement in 2022, with a ratio of 10.35, indicating a strong rebound in the efficiency of utilizing fixed assets for revenue generation.

It is noteworthy that the data is missing for 2023 and 2024, which limits our ability to analyze the trend further. We would need additional information for those years to provide a more comprehensive assessment of LKQ Corporation's long-term fixed asset turnover performance.

Moving on to the total asset turnover ratio, this metric measures the efficiency of the company in generating sales in relation to its total assets. LKQ Corporation shows a relatively stable performance in this aspect, with the total asset turnover ratio increasing from 0.94 in 2020 to 1.06 in 2022, indicating a slight improvement in utilizing its total assets to generate revenue.

However, there is a slight dip in the total asset turnover ratio in 2023 to 0.92, which may suggest a temporary decrease in the company's efficiency in generating sales compared to its total asset base. The ratio slightly recovers to 0.96 by 2024, indicating a marginal improvement in this aspect.

Overall, while the total asset turnover ratio demonstrates a relatively stable performance, the fixed asset turnover ratio has shown fluctuations over the years, with a notable improvement in 2022. The missing data for 2023 and 2024 limits the ability to provide a more detailed analysis of LKQ Corporation's long-term activity ratios.