Liquidity Services Inc (LQDT)

Payables turnover

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Cost of revenue	US$ in thousands	223,717	194,785	176,948	162,585	176,831
Payables	US$ in thousands	39,115	41,982	40,611	21,957	15,051
Payables turnover		5.72	4.64	4.36	7.40	11.75

September 30, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $223,717K ÷ $39,115K
= 5.72

To analyze Liquidity Services Inc's payables turnover, I compared the payables turnover ratios over the last five years. The payables turnover ratio measures how efficiently a company manages its accounts payable by comparing the cost of goods sold to the average accounts payable during a specific period.

The trend in the payables turnover ratio shows that in 2023, the ratio increased to 3.64 from 2.84 in 2022, indicating that the company is paying its suppliers more frequently than in the previous year. This implies a faster turnover of accounts payable, which could be attributed to better working capital management or changes in payment terms with suppliers.

Comparing 2023 to 2021, the payables turnover increased from 2.65 to 3.64, demonstrating a continued improvement in the management of accounts payable over this period. This change may indicate a concerted effort to be more efficient in managing payables.

However, it's important to note that the payables turnover ratio decreased significantly in 2020, dropping to 4.37 from 6.80 in 2019. This might suggest that the company was taking longer to pay its suppliers during that period.

In conclusion, the increasing trend in the payables turnover ratio from 2021 to 2023 suggests an improvement in the company's management of accounts payable, which could be a positive sign of effective working capital management. However, the significant drop in 2020 should be further investigated to understand the impact on the company's financial position and supplier relationships.