Liquidity Services Inc (LQDT)

Cash conversion cycle

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	23.20	19.84	24.09	23.39	18.13	20.83	26.54	30.03	21.88	27.57	25.26	26.33	25.93	30.10	30.34	22.70	12.60	16.02	17.52	14.08
Days of sales outstanding (DSO)	days	11.40	9.47	10.65	8.91	9.02	7.33	7.25	10.16	15.35	10.77	8.75	10.58	8.29	8.19	9.43	8.23	9.39	8.98	9.95	9.73
Number of days of payables	days	79.63	61.08	75.73	52.37	63.79	74.07	74.49	57.96	78.64	90.67	79.24	63.62	84.46	86.70	85.30	57.74	49.32	62.67	39.54	23.55
Cash conversion cycle	days	-45.04	-31.78	-40.99	-20.07	-36.64	-45.92	-40.70	-17.77	-41.41	-52.32	-45.23	-26.71	-50.24	-48.41	-45.53	-26.81	-27.34	-37.67	-12.08	0.26

September 30, 2024 calculation

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

Liquidity Services Inc's cash conversion cycle, which represents the time it takes for the company to convert its investments in inventory and receivables into cash inflows, has shown fluctuations over the past few quarters. The negative values indicate that the company is efficiently managing its working capital, resulting in a shorter cash conversion cycle.

The trend indicates that the cash conversion cycle was relatively stable from December 2019 to June 2022, hovering around the -45 to -50 days mark. However, there was a significant improvement in the cycle by December 2022, with a decrease to around -17 days, indicating a more efficient conversion of inventory and receivables into cash.

Subsequently, the cycle lengthened slightly in the following quarters but remained negative, meaning the company continued to effectively manage its working capital. However, there was a notable improvement in efficiency by March 2024, with the cycle shortening to approximately -41 days.

Overall, the trend suggests that Liquidity Services Inc has been successfully managing its cash conversion cycle, reflecting efficient inventory and receivables management, indicating a positive liquidity position for the company.