KB Home (KBH)

Inventory turnover

		Nov 30, 2024	Aug 31, 2024	May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020
Cost of revenue (ttm)	US$ in thousands	120,342	116,898	116,708	116,248	115,625	134,108	127,482	126,341	125,256	93,882	97,582	97,091	100,144	977,028	1,770,279	2,508,199	3,384,534	3,683,742	3,828,948	3,928,396
Inventory	US$ in thousands	5,528,020	5,648,930	5,335,180	5,243,580	5,133,650	5,185,880	5,128,840	5,445,150	5,543,180	5,736,700	5,557,650	5,197,830	4,802,830	4,655,880	4,272,570	4,123,950	3,897,480	3,671,130	3,607,460	3,728,620
Inventory turnover		0.02	0.02	0.02	0.02	0.02	0.03	0.02	0.02	0.02	0.02	0.02	0.02	0.02	0.21	0.41	0.61	0.87	1.00	1.06	1.05

November 30, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $120,342K ÷ $5,528,020K
= 0.02

To analyze KB Home's inventory turnover, we track the performance of this ratio over the past few years. Inventory turnover is a measure of how efficiently a company manages its inventory by assessing how many times, on average, the inventory is sold and replaced within a specific period.

- In February 2020, the inventory turnover was 1.05, indicating that KB Home turned over its inventory slightly more than once during that period.
- The ratio remained relatively stable around 1.00 in May and August 2020, suggesting consistent inventory management.
- However, we observed a decline in inventory turnover starting from November 2020, dropping to 0.87, indicating a slower rate of inventory turnover.
- This downward trend continued into 2021, with inventory turnover decreasing to 0.61 in February and further declining to 0.41 in May.
- The inventory turnover ratio experienced a significant drop to 0.21 in August 2021, highlighting potential concerns regarding inventory management efficiency.
- The ratio remained at very low levels for the following quarters, hovering around 0.02 to 0.03, indicating challenges in selling and replenishing inventory promptly.
- It is important to note that a low inventory turnover ratio may signify overstocking, obsolete inventory, or difficulties in selling products.
- Monitoring inventory turnover is crucial for companies like KB Home operating in the homebuilding industry to ensure efficient inventory management, minimize carrying costs, and optimize cash flows.