LKQ Corporation (LKQ)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 13,866,000 | 12,794,000 | 13,089,000 | 11,629,000 | 12,506,100 |
| Total current assets | US$ in thousands | 4,868,000 | 4,258,000 | 4,254,000 | 4,034,030 | 4,687,820 |
| Total current liabilities | US$ in thousands | 3,318,000 | 2,271,000 | 2,165,000 | 1,988,490 | 2,178,510 |
| Working capital turnover | 8.95 | 6.44 | 6.27 | 5.69 | 4.98 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $13,866,000K ÷ ($4,868,000K – $3,318,000K)
= 8.95
The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. A higher ratio indicates that the company is effectively managing its working capital to support its sales activities.
Analyzing the trend of LKQ Corp's working capital turnover over the past five years, we can observe a consistent increase from 4.98 in 2019 to 8.95 in 2023. This signifies an improvement in the company's ability to convert its working capital into sales revenue.
The increasing trend suggests that LKQ Corp has been able to optimize its working capital management practices, resulting in a more efficient utilization of its resources to drive sales growth. This could be indicative of effective inventory management, accounts receivable collection, and accounts payable management strategies.
Overall, the rising working capital turnover ratio for LKQ Corp indicates a positive trend in the company's operational efficiency and financial performance over the years, reflecting better management of working capital to support its revenue generation activities.