KB Home (KBH)

The liquidity ratios of KB Home indicate the company's ability to meet its short-term financial obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has exhibited a generally increasing trend over the past five years, reaching 5.43 in November 2023. This suggests that the company has ample current assets to cover its current liabilities.

In contrast, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown volatility over the period. Despite improving to 0.96 in November 2023, it had experienced a significant drop in November 2022. This may indicate fluctuations in the company's ability to quickly meet its short-term obligations without relying on selling inventory.

Furthermore, the cash ratio, which presents the proportion of immediate cash available to cover current liabilities, has also displayed variability, with a notable improvement to 0.63 in November 2023. However, this ratio remains below 1, suggesting that KB Home may have limited cash reserves for meeting its short-term obligations.

Overall, while the current ratio portrays a robust liquidity position for KB Home, the quick and cash ratios reveal some fluctuations and potential limitations in the company's ability to cover short-term liabilities with more liquid assets. It is essential to monitor these ratios closely to assess the company's ongoing ability to meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle for KB Home over the past five years has shown fluctuations. In the most recent fiscal year, ending on November 30, 2023, the cash conversion cycle decreased to 365.36 days from 376.46 days in the previous year. This indicates an improvement in the company's ability to convert its investments in inventory and receivables into cash. However, it is worth noting that the cash conversion cycle had reached its highest point in the fiscal year ending November 30, 2020, at 415.27 days. This suggests that the company had encountered challenges in managing its cash flow and working capital during that period. Overall, the trend in the cash conversion cycle for KB Home reflects fluctuations in the efficiency of its working capital management over the past five years.