LKQ Corporation (LKQ)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 11.90 | 12.82 | 12.20 | 10.83 | 11.06 | |
| DSO | days | 30.67 | 28.47 | 29.92 | 33.69 | 33.01 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 11.90
= 30.67
Days sales outstanding (DSO) measures how long it takes for a company to collect its accounts receivable. A lower DSO indicates a faster collection process, which is generally favorable as it implies better cash flow management and liquidity.
Looking at the trend for LKQ Corp over the past five years, we observe that the DSO has fluctuated within a relatively narrow range. In 2023, the DSO increased slightly to 30.67 days from 28.47 days in 2022. This uptick may suggest a slower collection process compared to the previous year. However, it is worth noting that the DSO in 2023 is still below the levels seen in 2020 and 2019.
The stability of DSO over the years indicates that LKQ Corp has been effectively managing its accounts receivable turnover and collection policies. Investors and analysts should continue to monitor this metric along with other financial ratios to assess the company's overall financial health and efficiency in managing working capital.