Liquidity Services Inc (LQDT)

Days of Inventory on Hand (DOH) is a critical financial ratio that measures the number of days a company takes to sell its inventory. A lower DOH indicates better inventory management and higher inventory turnover, which can lead to improved liquidity and profitability.

Looking at the trend of Liquidity Services Inc's DOH over the past five years, we observe a fluctuating pattern. In 2019, the DOH stood at 20.82 days, indicating that the company took approximately 20 days to sell its inventory. However, in 2020, the DOH increased significantly to 21.31 days, suggesting a slight delay in inventory turnover.

In the subsequent year, there was a substantial rise in the DOH to 42.26 days, signifying a notable slowdown in inventory turnover. This increase could potentially result in increased holding costs and reduced liquidity due to tied-up capital.

However, the company's inventory management improved in 2022 as the DOH decreased to 35.70 days, indicating a better pace of inventory turnover compared to the previous year. Notably, in 2023, the DOH decreased further to 28.51 days, representing a significant improvement in inventory management efficiency.

Overall, despite some fluctuations, it is positive to note the decreasing trend in DOH over the last two years, which suggests that Liquidity Services Inc has been able to manage its inventory more effectively, potentially freeing up capital and enhancing its overall liquidity position. However, continual monitoring of this ratio will be essential to ensure sustained improvements in inventory management and optimize the company's liquidity position.

Peer comparison

Sep 30, 2023