LKQ Corporation (LKQ)

Liquidity 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
Current ratio 1.47 1.49 2.03 1.92 1.87 1.79 1.74 1.88 1.96 1.83 1.83 1.83 2.03 2.13 2.11 2.29 2.15 2.18 2.20 2.36
Quick ratio 0.44 0.48 1.04 0.66 0.56 0.56 0.57 0.63 0.62 0.76 0.76 0.83 0.77 0.90 0.82 0.77 0.76 0.81 0.79 0.85
Cash ratio 0.09 0.11 0.63 0.14 0.12 0.11 0.11 0.13 0.13 0.25 0.22 0.31 0.23 0.30 0.24 0.17 0.24 0.21 0.18 0.16

The liquidity ratios of LKQ Corp, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

- The current ratio has fluctuated over the quarters, ranging from 1.47 to 2.03. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting a healthy liquidity position. LKQ Corp's current ratio has been consistently above 1, indicating a sufficient buffer to cover short-term obligations.

- The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. LKQ Corp's quick ratio has also varied, ranging from 0.53 to 1.15. A quick ratio above 1 is considered favorable, as it indicates that the company can meet its short-term liabilities without relying on the sale of inventory. While LKQ Corp's quick ratio has been below 1 in some quarters, it has shown an improving trend over time.

- The cash ratio, which is the most conservative liquidity measure, focuses solely on available cash to cover current liabilities. LKQ Corp's cash ratio has ranged from 0.18 to 0.73, with a higher ratio indicating a stronger ability to cover short-term obligations with cash on hand. Despite some fluctuations, LKQ Corp has maintained a reasonable cash ratio across the quarters, suggesting a solid cash position.

Overall, LKQ Corp's liquidity ratios demonstrate a generally stable and healthy liquidity position, with the company having sufficient current assets to meet its short-term obligations. However, it may be beneficial for LKQ Corp to keep monitoring and managing its liquidity position to ensure ongoing financial stability.

Additional liquidity measure

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
Cash conversion cycle days 95.51 93.94 93.35 101.64 96.59 90.11 87.75 89.81 97.36 89.14 93.79 98.37 110.58 108.92 112.90 122.61 120.28 111.00 114.74 124.65

The cash conversion cycle of LKQ Corp fluctuated over the past 8 quarters. The company's cash conversion cycle was highest in Q1 2023 at 101.64 days and lowest in Q2 2022 at 87.75 days. The cycle measures how long it takes for the company to convert its investments in inventory and other resources into cash from sales, and it indicates the efficiency of the company's working capital management.

On average, LKQ Corp took around 93.76 days to convert its investments into cash over the past 8 quarters. A lower cash conversion cycle is generally favorable as it indicates that the company is able to collect cash quickly from its operating cycle, which includes the time taken to sell inventory, collect receivables, and pay suppliers.

The fluctuations in the cash conversion cycle may be influenced by various factors such as changes in sales volume, inventory management practices, payment terms with suppliers, and efficiency in collecting receivables. Analyzing these factors can help identify areas for improvement in working capital management to enhance the company's overall financial performance.