KB Home (KBH)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 16,766.61 | 17,638.11 | 16,685.58 | 16,464.00 | 16,205.68 | 14,114.34 | 14,684.63 | 15,731.08 | 16,153.00 | 22,303.48 | 20,788.08 | 19,540.51 | 17,505.12 | 1,739.35 | 880.93 | 600.13 | 420.32 | 363.75 | 343.89 | 346.44 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 3.48 | 3.36 | 3.36 |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 16,766.61 | 17,638.11 | 16,685.58 | 16,464.00 | 16,205.68 | 14,114.34 | 14,684.63 | 15,731.08 | 16,153.00 | 22,303.48 | 20,788.08 | 19,540.51 | 17,505.12 | 1,739.35 | 880.93 | 600.13 | 420.32 | 367.23 | 347.24 | 349.80 |
November 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16,766.61 + — – —
= 16,766.61
The cash conversion cycle measures the time it takes for a company like KB Home to convert its investments in inventory and other resources into cash flows from sales. Looking at the historical trend from February 29, 2020, to November 30, 2024, we observe fluctuations in KB Home's cash conversion cycle.
From 2020 to early 2021, the cash conversion cycle remained relatively stable, ranging between approximately 350 to 600 days. However, starting from May 31, 2021, there was a significant increase in the cash conversion cycle, reaching a peak of over 22,000 days by August 31, 2022. This sharp spike suggests potential concerns regarding KB Home's ability to efficiently manage its cash flows and working capital during that period.
Subsequently, from late 2022 to 2024, there was a notable decrease in the cash conversion cycle, settling around 16,000 to 17,000 days. This decline could indicate improvements in inventory turnover, collection of receivables, or management of payables, leading to a shorter cash conversion cycle for KB Home.
Overall, the varying levels of the cash conversion cycle over the years reflect fluctuations in KB Home's operational efficiency and financial management. It is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure healthy working capital levels and overall financial stability.
Peer comparison
Nov 30, 2024