KB Home (KBH)

The current ratio for KB Home has shown fluctuations over the years, standing at 0.73 in November 30, 2020, declining to 0.26 in November 30, 2021, and then gradually improving to 0.63 in November 30, 2023. However, in the most recent financial year, November 30, 2024, the current ratio is not provided. This ratio measures the company's ability to cover its short-term liabilities with its current assets. Despite the improvements, the current ratio is generally below 1, indicating potential liquidity concerns in meeting short-term obligations.

Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has followed a similar trend. It was 0.73 in November 30, 2020, dropped to 0.26 in November 30, 2021, and then increased to 0.85 in November 30, 2023. However, the value for November 30, 2024, is not available. The quick ratio's values also suggest a struggle to cover short-term liabilities with highly liquid assets.

The cash ratio, which is the most stringent liquidity ratio as it only considers cash and cash equivalents, mirrors the trends observed in the current and quick ratios. It was consistent at 0.73 in November 30, 2020, and November 30, 2021, then rose to 0.85 in November 30, 2023. However, just like the others, data for November 30, 2024, is not provided.

Overall, the liquidity ratios of KB Home indicate a mixed performance, with improvements in recent years but still raising concerns about the company's ability to meet its short-term obligations promptly. Further analysis and monitoring of liquidity management may be warranted to ensure financial stability and flexibility.

---

Additional liquidity measure

The cash conversion cycle of KB Home has exhibited fluctuations over the years. In November 2020, the cycle was 420.32 days, indicating the company was taking just over a year to convert its investments in inventory back to cash. However, in the subsequent years, the cycle extended significantly, reaching 16,392.06 days in November 2021, 15,146.09 days in November 2022, and 16,205.68 days in November 2023. These longer cycles suggest potential issues such as inefficiencies in managing accounts receivables, inventory, and payables, leading to delayed cash inflows.

Interestingly, in November 2024, the cash conversion cycle plummeted to 0.00 days, which may indicate a significant improvement in efficiency, where the company was able to quickly convert its investments back into cash. This sudden improvement could be due to various factors such as better inventory management, enhanced collection times, or renegotiated payment terms with suppliers.

Overall, the trend in KB Home's cash conversion cycle highlights the importance of effective working capital management in ensuring smooth operations and maximizing cash flow efficiency.