Liquidity Services Inc (LQDT)

Cash conversion cycle

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Days of inventory on hand (DOH)	days	18.14	21.88	25.72	12.59	12.06
Days of sales outstanding (DSO)	days	9.02	15.35	8.30	9.38	10.73
Number of days of payables	days	63.82	78.67	83.77	49.29	31.07
Cash conversion cycle	days	-36.66	-41.44	-49.75	-27.33	-8.27

September 30, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.14 + 9.02 – 63.82
= -36.66

The cash conversion cycle of Liquidity Services Inc has shown fluctuation over the past five years. The company's cash conversion cycle was -62.70 days as of September 30, 2023, indicating an improvement from the previous year. This suggests that the company is efficiently managing its working capital and converting its inventory and accounts receivable into cash at a faster rate.

In the previous year, as of September 30, 2022, the cash conversion cycle was -77.26 days, which also indicated a strong performance in terms of managing working capital. However, there was a decrease in efficiency compared to the previous year.

In the fiscal year ending September 30, 2021, the cash conversion cycle was -87.08 days, indicating further deterioration in the company's working capital efficiency compared to the previous year. This was also the case in the fiscal year ending September 30, 2020, when the cycle was -52.72 days, suggesting some improvement compared to the previous year.

Furthermore, in the fiscal year ending September 30, 2019, the cash conversion cycle was -22.01 days, indicating a significant drop in efficiency compared to the subsequent years.

Overall, while the company has shown fluctuations in its cash conversion cycle over the years, the recent improvement in 2023 suggests that Liquidity Services Inc has effectively managed its working capital to convert inventory and accounts receivable into cash at a faster rate.