Liquidity Services Inc (LQDT)

Cash conversion cycle

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	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	16.78	72.68	175.45
Days of sales outstanding (DSO)	days	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	10.74	9.45	10.49
Number of days of payables	days	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	43.23	108.63	149.58
Cash conversion cycle	days	-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	-15.70	-26.50	36.35

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 23.39 + 8.91 – 52.37
= -20.07

The cash conversion cycle for Liquidity Services Inc has shown fluctuations over the past eight quarters. In Q1 2024, the company significantly improved its cash conversion cycle to -37.03 days, indicating that it took fewer days to convert inventory into cash during this period compared to previous quarters. This improvement may suggest more efficient management of working capital and better control over inventory and accounts receivable.

In Q4 2023, the cash conversion cycle was -62.70 days, which was worse compared to Q1 2024 but still better than some previous quarters. The sharp decrease in the cash conversion cycle from Q3 2023 to Q4 2023 could indicate that the company managed to collect cash more quickly from its sales, although there could have been certain factors affecting this metric.

Throughout Q2-Q4 2022 and Q1 2023, the company experienced longer cash conversion cycles, indicating that it took more days to convert inventory into cash during those periods. This could have been caused by inefficient inventory management, slow collection of accounts receivable, or delays in paying accounts payable.

Overall, there is a mix of positive and negative trends in Liquidity Services Inc's cash conversion cycle, hinting at potential areas of improvement in working capital management strategies. Monitoring these fluctuations and understanding the underlying factors driving them will be crucial for the company's financial health and operational efficiency.