KB Home (KBH)
Cash conversion cycle
| 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 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 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 | 364.15 | 401.35 | 381.03 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 3.48 | 3.36 | 3.36 | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 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 | 364.15 | 401.35 | 381.03 |
February 29, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 16,464.00 + — – —
= 16,464.00
The cash conversion cycle of KB Home has shown fluctuating trends over the past few years. The cycle measures the length of time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
From February 2019 to August 2020, there was a relatively stable cash conversion cycle ranging between 364 days to 401 days. This suggests that KB Home was efficient in managing its inventory, accounts receivable, and accounts payable during this period.
However, there was a significant spike in the cash conversion cycle from August 2020 to August 2022, peaking at 22,303 days. This sharp increase indicates potential challenges in managing working capital effectively and converting investments into cash. It may imply issues such as slow inventory turnover, extended accounts receivable collection periods, or delayed payments to suppliers.
Subsequently, there was a notable improvement in the cash conversion cycle from August 2022 to November 2023, with the cycle decreasing to around 14,000 to 16,000 days. This improvement suggests that KB Home may have implemented strategies to enhance efficiency in its working capital management.
Overall, KB Home's cash conversion cycle analysis indicates periods of operational efficiency and challenges in working capital management. Investors and stakeholders should closely monitor future trends in the cash conversion cycle to assess the company's liquidity and financial performance.
Peer comparison
Feb 29, 2024