The steady gross margin around 19-21% suggests Carvana maintains pricing power despite rapid growth, but the slight decline from 21.2% in 2025Q2 to 18.8% in 2026Q2 warrants monitoring. Operating margin improvement from 4.4% to 9.2% over ten quarters reflects significant operating leverage, as fixed costs are spread over a larger revenue base. Net margin spiked to 15.3% in 2025Q4, likely due to a one-time gain, so the sustainable earning power is better captured by operating margin, which remains in the high single digits.

ROIC has more than tripled from 1.7% to 6.4% over the period, driven by margin expansion and improved asset turnover, which rose from 0.44 to 0.52. However, ROIC remains below typical cost of capital estimates (8-10%), suggesting that while returns are improving, they have not yet reached a level that would justify the current valuation. The sharp ROE spike to 42.4% in 2024Q3 was likely due to a low equity base, as equity has since grown dramatically, normalizing ROE to around 6-9% in recent quarters.

The CCC improvement from 49 to 42 days is modest but positive, with DSO dropping from 9 to 10 days (though 2026Q1 showed 4 days, likely a timing artifact) and DIO stable around 40-48 days. DPO has been volatile, swinging from 5 to 14 days, which may indicate changing payment terms with suppliers. Asset turnover improved from 0.44 to 0.52, reflecting better utilization of the asset base, but remains low compared to traditional dealerships, highlighting the capital intensity of the inventory model.

The dramatic deleveraging is primarily due to equity growth from $289M to $4.0B, as total debt remained stable near $5.6B. Interest coverage improved from 1.28 to 6.73, indicating that debt service is now more comfortable, though the negative coverage in 2025Q4 was due to a one-time gain inflating EBIT. D/EBITDA has declined from 29.66 to 7.50, but remains elevated, suggesting that while leverage is manageable, it is still high relative to EBITDA, and refinancing risk should be monitored given the stable debt level.

The current ratio of 3.93 indicates a strong liquidity position, well above the 1.5-2.0 typical for retailers, and the quick ratio of 2.33 suggests that even without inventory, current assets cover current liabilities comfortably. Cash of $2.6B provides a robust buffer against operational shocks, though the large working capital swings (e.g., $823M outflow in 2026Q2) could strain liquidity if they persist. The improvement from 2.54 to 3.93 over ten quarters reflects both equity growth and better working capital management.