LKQ Corporation (LKQ)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 131.97 | 127.36 | 124.78 | 131.84 | 137.40 | 137.35 | 128.47 | 132.00 | 132.67 | 124.75 | 123.46 | 119.18 | 122.69 | 115.89 | 116.06 | 122.56 | 125.27 | 116.02 | 116.59 | 131.44 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 131.97 | 127.36 | 124.78 | 131.84 | 137.40 | 137.35 | 128.47 | 132.00 | 132.67 | 124.75 | 123.46 | 119.18 | 122.69 | 115.89 | 116.06 | 122.56 | 125.27 | 116.02 | 116.59 | 131.44 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 131.97 + — – —
= 131.97
The cash conversion cycle is a critical metric that measures how long it takes a company like LKQ Corporation to convert its investments in inventory and other resources into cash inflows from sales.
Based on the provided data, LKQ Corporation's cash conversion cycle has shown fluctuations over the quarters, ranging from a low of 115.89 days in September 2021 to a high of 137.40 days in December 2023.
A lower cash conversion cycle indicates that the company is able to convert its investments into cash more quickly, which is generally favorable as it signifies efficient working capital management. Conversely, a longer cash conversion cycle implies that the company takes more time to convert its resources into cash, potentially tying up capital and leading to liquidity challenges.
Overall, LKQ Corporation should aim to monitor its cash conversion cycle closely, identifying trends and making strategic adjustments as needed to optimize working capital efficiency and ensure healthy cash flows.