LKQ Corporation (LKQ)

Activity ratios

Short-term

Turnover ratios

	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
Inventory turnover	2.66	2.66	2.84	2.77	2.75	2.93	2.96	3.06	2.97	3.15	3.15	2.98	2.91	3.15	3.13	2.78	2.76	2.97	2.89	2.80
Receivables turnover	11.90	10.27	10.26	10.18	12.82	12.35	11.35	10.71	12.20	10.85	10.29	9.42	10.83	9.95	10.47	10.62	11.06	10.22	9.70	9.06
Payables turnover	5.03	4.62	5.16	5.51	5.65	5.69	5.38	5.75	6.60	6.04	6.32	5.80	7.55	8.33	9.47	8.45	8.12	7.70	7.42	7.90
Working capital turnover	8.95	7.74	4.12	5.79	6.44	7.01	7.14	6.07	6.27	6.64	6.67	5.85	5.69	5.37	5.46	4.96	4.98	5.14	4.94	4.58

LKQ Corp's activity ratios provide insights into how efficiently the company is managing its operations and various resources.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. LKQ Corp's inventory turnover has been relatively stable around 2.7 times per year, indicating a moderate efficiency in managing its inventory levels.

2. Receivables Turnover: This ratio reflects how effectively a company is collecting on its credit sales. LKQ Corp's receivables turnover has shown some fluctuations but has generally remained above 10, indicating efficient collection of receivables.

3. Payables Turnover: The payables turnover ratio signifies how quickly a company pays off its suppliers. LKQ Corp's payables turnover has varied but has been consistently around 5 times per year. This indicates a moderate pace of paying off its creditors.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company generates revenue with its working capital. LKQ Corp's working capital turnover has varied significantly, with a notable decline in Q2 2023 compared to previous quarters. This suggests a change in how effectively the company is utilizing its working capital to generate sales.

Overall, LKQ Corp's activity ratios suggest a moderate level of efficiency in managing its inventory, receivables, payables, and working capital, with some fluctuations observed in certain periods. It would be important for the company to carefully monitor these ratios to ensure optimal operational performance and financial health.

Average number of days

		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	137.40	137.35	128.47	132.00	132.67	124.74	123.45	119.17	122.70	115.88	116.04	122.56	125.26	116.02	116.59	131.44	132.22	122.70	126.29	130.54
Days of sales outstanding (DSO)	days	30.67	35.53	35.56	35.86	28.47	29.56	32.17	34.09	29.92	33.64	35.49	38.74	33.69	36.69	34.87	34.38	33.01	35.72	37.62	40.31
Number of days of payables	days	72.55	78.94	70.68	66.22	64.55	64.19	67.88	63.45	55.26	60.38	57.74	62.93	48.37	43.79	38.56	43.21	44.96	47.42	49.18	46.20

1. Days of Inventory on Hand (DOH):
The Days of Inventory on Hand for LKQ Corp has been relatively stable over the past eight quarters, ranging from 119.18 to 137.40 days. This indicates that the company is maintaining inventory for an average of around 120-140 days to support its operations. While a higher DOH may suggest inefficient inventory management and potential obsolescence risks, the consistency in the range suggests that LKQ Corp has a consistent approach to managing its inventory levels.

2. Days of Sales Outstanding (DSO):
The Days of Sales Outstanding for LKQ Corp has fluctuated over the past eight quarters, ranging from 28.47 to 35.86 days. A lower DSO indicates faster collection of receivables and better liquidity management. Despite the fluctuations, the company has generally maintained its DSO within a reasonable range. The recent increase in DSO from Q4 2022 to Q1 2023 might indicate a need to improve the efficiency of the company's accounts receivable collection process.

3. Number of Days of Payables:
LKQ Corp's Number of Days of Payables has varied between 63.46 to 78.94 days over the past eight quarters. A longer period of payables suggests that the company is taking longer to pay off its suppliers, which could indicate strong negotiating power or liquidity constraints. The recent decrease in Days of Payables from Q3 2023 to Q4 2023 might indicate a more efficient payment cycle or improved liquidity position.

In conclusion, LKQ Corp's activity ratios reflect a balance between managing inventory levels, collecting receivables, and paying off suppliers. The company should continue to monitor and potentially optimize these ratios to improve working capital efficiency and overall financial performance.

Long-term

	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
Fixed asset turnover	9.15	9.37	9.94	10.11	10.35	11.10	10.82	10.56	10.08	10.78	10.44	9.79	9.31	9.70	9.85	10.32	10.13	10.55	10.34	10.16
Total asset turnover	0.92	0.88	0.91	1.02	1.06	1.11	1.09	1.04	1.04	1.03	1.01	0.93	0.94	0.96	0.98	1.00	0.98	1.01	0.98	0.97

The fixed asset turnover ratio for LKQ Corp has been consistently high over the past eight quarters, ranging from 9.15 to 10.56. This indicates that the company is generating significant revenue relative to its investment in fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio suggests efficient utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated more over the same period, ranging from 0.88 to 1.11. The ratio was highest in Q3 2022 at 1.11 and lowest in Q4 2023 at 0.92. A lower total asset turnover ratio implies that LKQ Corp is generating less revenue relative to its total assets. This may be due to changes in the business model, increased investment in non-operating assets, or challenges in generating sales with current asset levels.

In conclusion, while the company appears to be efficiently utilizing its fixed assets to drive revenue, there is variability in how effectively LKQ Corp is utilizing its total assets to generate sales. Further analysis would be required to understand the factors contributing to these fluctuations in the total asset turnover ratio.