Liquidity Services Inc (LQDT)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	23.20	18.14	21.88	25.72	12.59
Days of sales outstanding (DSO)	days	11.40	9.02	15.35	8.30	9.38
Number of days of payables	days	79.63	63.82	78.67	83.77	49.29
Cash conversion cycle	days	-45.04	-36.66	-41.44	-49.75	-27.33

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 23.20 + 11.40 – 79.63
= -45.04

The cash conversion cycle of Liquidity Services Inc has fluctuated over the past five years. In 2024, the company's cash conversion cycle improved to -45.04 days compared to -36.66 days in 2023. The trend indicates that the company is efficiently managing its working capital and converting its inventory and accounts receivable into cash at a faster rate.

Despite the improvement in 2024, the company's cash conversion cycle was better in 2020 at -27.33 days. This suggests that Liquidity Services Inc might have experienced challenges in managing its working capital efficiency in the intervening years, leading to a longer cash conversion cycle.

Overall, a negative cash conversion cycle indicates that Liquidity Services Inc has been able to collect payments from customers and manage its inventory effectively, resulting in a shorter time to convert its resources into cash. Continued focus on optimizing working capital management could further enhance the efficiency of the company's cash conversion cycle in the future.