The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated as a company's Total Current Assets divides by its Total Current Liabilities. Lithia Motors's current ratio for the quarter that ended in Dec. 2023 was 1.41.
Lithia Motors has a current ratio of 1.41. It generally indicates good short-term financial strength.
The historical rank and industry rank for Lithia Motors's Current Ratio or its related term are showing as below:
LAD'
s Current Ratio Range Over the Past 10 Years
Min: 1.12 Med: 1.21 Max: 1.46
Current: 1.41
During the past 13 years, Lithia Motors's highest Current Ratio was 1.46. The lowest was 1.12. And the median was 1.21.
LAD's Current Ratio is ranked worse than 54.63% of 1307
companies
in the Vehicles & Parts industry
Industry Median: 1.53
vs LAD: 1.41
Lithia Motors Current Ratio Historical Data
The historical data trend for Lithia Motors's Current Ratio can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Lithia Motors's Current Ratio
For the Auto & Truck Dealerships subindustry, Lithia Motors's Current Ratio, along with its competitors' market caps and Current Ratio data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Lithia Motors's Current Ratio Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, Lithia Motors's Current Ratio distribution charts can be found below:
* The bar in red indicates where Lithia Motors's Current Ratio falls into.
Lithia Motors Current Ratio Calculation
The current ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities with its short-term assets.
Lithia Motors's Current Ratio for the fiscal year that ended in Dec. 2023 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Lithia Motors (NYSE:LAD) Current Ratio Explanation
The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each industry, it is always more useful to compare companies within the same industry.
Acceptable current ratios vary from industry to industry and are generally between 1 and 3 for healthy businesses.
The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a good sign.
If all other things were equal, a creditor, who is expecting to be paid in the next 12 months, would consider a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which fall due in the next 12 months.
Lithia Motors Current Ratio Related Terms
Thank you for viewing the detailed overview of Lithia Motors's Current Ratio provided by GuruFocus.com. Please click on the following links to see related term pages.
Lithia Motors (Lithia Motors) Business Description
Lithia Motors is a retailer of new and used vehicles and related services. The company offers over 45 brands of vehicles at about 350 stores globally including 28 U.S. states at year-end 2022 and entered Canada in mid-2021 with the purchase of Pfaff Automotive and bought Jardine and soon Pendragon in the U.K. in 2023. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the U.S. and we expect more deals over time in the U.S. and abroad. Annual revenue in 2022 was $28.2 billion and we see over $50 billion possible in 2025. In 2022, new-car sales were about 46% of total revenue. Lithia was founded in 1946, went public in 1996, and is now the largest U.S. auto dealer. It is based in Medford, Oregon.
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