KB Home (KBH)

Liquidity ratios

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
Current ratio 0.47 0.63 0.44 0.36 0.05 0.29 0.16 0.21 0.22 0.26 0.33 0.62 0.61 0.73 0.89 0.79 0.55 0.52 0.20 0.21
Quick ratio 0.64 0.90 0.58 0.54 0.30 0.33 0.19 0.23 0.23 0.27 0.35 0.63 0.63 0.74 0.90 0.81 0.56 0.53 0.21 0.22
Cash ratio 0.64 0.90 0.58 0.54 0.30 0.33 0.19 0.23 0.23 0.27 0.35 0.63 0.63 0.74 0.85 0.75 0.51 0.53 0.21 0.22

Based on the data provided, the liquidity ratios of KB Home show varying levels over the time period analyzed.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has fluctuated significantly. It was below 1 for most of the periods, indicating potential liquidity concerns. However, there was an improvement in the most recent period compared to the earlier periods.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Like the current ratio, the quick ratio has shown fluctuations but generally improved in the most recent periods. The quick ratio was higher than the current ratio in most periods, suggesting a relatively more liquid position when excluding inventory.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has generally shown a similar trend to the quick ratio. The company's ability to cover its short-term obligations with cash has improved over time, with the cash ratio exceeding 0.5 in the most recent periods.

Overall, while KB Home has faced liquidity challenges in the past, there have been improvements in its liquidity position in the most recent periods, as indicated by the increasing current, quick, and cash ratios. It is essential for the company to continue monitoring and managing its liquidity to ensure it can meet its short-term obligations effectively.

Additional liquidity measure

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
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

The cash conversion cycle of KB Home has fluctuated over the past few years, reaching its highest point at 22,303.48 days in August 2022 and its lowest point at 347.24 days in May 2020. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From May 2020 to May 2021, there was a significant improvement in the cash conversion cycle, with a notable decrease from 367.23 days to 600.13 days. However, this trend reversed in the subsequent period, with the cycle increasing to 1,739.35 days by August 2021. This sudden increase may indicate challenges in managing inventory, collecting receivables, or optimizing payment terms with suppliers.

By Nov 2021, the company made significant progress in reducing the cash conversion cycle to 880.93 days, and this trend continued positively until the most recent data point in February 2024, where the cycle reached 16,464.00 days. Such a substantial increase in the cycle over a short period may warrant further investigation into the company's working capital management practices and overall operational efficiency.