Sonic Automotive Inc (SAH)

Inventory turnover

		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
Cost of revenue (ttm)	US$ in thousands	13,949,700	14,201,700	13,993,900	13,770,700	13,687,700	12,980,230	12,628,430	12,463,850	11,861,000	11,525,890	11,030,600	9,902,120	9,733,100	9,394,900	9,258,700	9,433,130	8,933,330	8,782,350	8,576,750	8,487,350
Inventory	US$ in thousands	1,578,300	1,433,900	1,448,800	1,462,600	1,216,800	1,197,100	1,240,400	1,198,100	1,261,200	850,469	1,016,570	1,232,250	1,247,300	1,137,850	1,176,510	1,608,220	1,517,880	1,528,670	1,521,570	1,530,200
Inventory turnover		8.84	9.90	9.66	9.42	11.25	10.84	10.18	10.40	9.40	13.55	10.85	8.04	7.80	8.26	7.87	5.87	5.89	5.75	5.64	5.55

December 31, 2023 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $13,949,700K ÷ $1,578,300K
= 8.84

Sonic Automotive, Inc.'s inventory turnover has shown some fluctuations over the past eight quarters. The trend indicates a gradual decrease in inventory turnover since Q4 2022 when it was at 9.60, reaching the lowest point in Q4 2023 at 7.68. This may suggest inefficiencies in managing inventory levels or challenges in converting inventory into sales within shorter periods.

Although the inventory turnover ratio improved slightly in Q3 2023 and Q2 2023 compared to the previous quarters, it remains below the levels seen in the first half of 2022. The company was able to turn its inventory over 8.44 times in Q3 2023 and 8.22 times in Q2 2023, showing some level of operational efficiency in converting inventory into sales during those periods.

Overall, Sonic Automotive, Inc. may benefit from reviewing its inventory management practices to enhance efficiency and optimize its inventory turnover ratios in order to improve cash flow and profitability.