Sonic Automotive Inc (SAH)

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	41.30	36.85	37.79	38.77	32.45	33.66	35.85	35.09	38.81	26.93	33.64	45.42	46.77	44.21	46.38	62.23	62.02	63.53	64.75	65.81
Days of sales outstanding (DSO)	days	13.54	11.04	10.39	9.82	12.13	9.74	9.60	9.87	11.86	8.48	11.38	13.36	13.94	10.81	11.95	7.07	15.11	12.96	13.22	13.65
Number of days of payables	days	3.92	3.68	3.42	3.94	3.69	3.91	3.89	3.64	4.10	3.33	4.85	5.02	3.94	3.60	4.17	3.03	5.52	4.98	5.47	5.48
Cash conversion cycle	days	50.92	44.22	44.76	44.65	40.89	39.49	41.56	41.31	46.57	32.08	40.17	53.75	56.78	51.42	54.16	66.27	71.60	71.51	72.50	73.98

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 41.30 + 13.54 – 3.92
= 50.92

The cash conversion cycle of Sonic Automotive, Inc. has been fluctuating over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 56.41 days, which was higher than the previous quarter but still elevated compared to historical data. This indicates that Sonic Automotive is taking longer to convert its investments in inventory and other resources into cash.

Overall, the trend shows that the company's cash conversion cycle has been gradually increasing over the past eight quarters, reaching a peak in Q4 2023. This suggests that Sonic Automotive may be facing challenges in efficiently managing its working capital, which could potentially impact its liquidity and cash flow in the future.

It is crucial for Sonic Automotive to closely monitor its cash conversion cycle and implement strategies to optimize its working capital management, such as improving inventory turnover and reducing the time it takes to collect receivables. By doing so, the company can enhance its financial performance and ensure its long-term sustainability.