Sonic Automotive Inc (SAH)

Days of inventory on hand (DOH)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover		8.84	11.25	9.40	7.80	5.89
DOH	days	41.30	32.45	38.81	46.77	62.02

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 8.84
= 41.30

The days of inventory on hand (DOH) for Sonic Automotive, Inc. have shown fluctuations over the past five years. In 2023, the DOH increased to 47.51 days from 38.01 days in 2022, indicating that the company is holding its inventory for a longer period before it is sold. This could suggest potential inefficiencies in managing inventory levels, which may tie up working capital and lead to higher storage costs.

Comparing the current DOH with historical data, it is noted that there has been some variability in inventory management efficiency. The DOH was at its lowest in 2022 at 38.01 days, before increasing in 2023. However, it is still lower than the levels seen in 2019 and 2020, suggesting an improvement in inventory turnover efficiency in those years.

Overall, the trend in DOH for Sonic Automotive, Inc. indicates the need for continuous monitoring and optimization of inventory levels to improve operational efficiency and cash flow management. Implementing effective inventory control practices may help the company enhance profitability and reduce potential risks associated with excess inventory.