Korn Ferry (KFY)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory by showing how many times it sells and replaces its inventory over a specific period. Korn Ferry's inventory turnover has shown a declining trend over the past five years, from a high of 58.84 in 2020 to an unknown figure in 2024. This indicates that the company is holding onto its inventory for longer periods, which could potentially tie up capital and affect liquidity.

Receivables turnover ratio reflects how efficiently a company collects payments from its customers. Korn Ferry's receivables turnover has been relatively stable over the years, ranging from 4.06 in 2021 to 5.17 in 2024, suggesting that the company efficiently collects payments from its clients.

Payables turnover ratio indicates how well a company manages its accounts payable by showing how many times it pays its suppliers within a specific period. Korn Ferry's payables turnover has been increasing steadily over the past five years, from 34.59 in 2020 to 43.94 in 2024. This indicates that the company is managing its payables more efficiently, possibly negotiating better payment terms with suppliers.

Working capital turnover ratio measures how effectively a company utilizes its working capital to generate revenue. Korn Ferry's working capital turnover has fluctuated over the years, with a peak of 4.33 in 2023 and a low of 2.47 in 2021, before reaching 3.79 in 2024. This suggests that the company's ability to generate revenue from its working capital has varied but has shown improvement in the most recent year.

In conclusion, Korn Ferry's activity ratios indicate a mix of efficiency in managing inventory and working capital, along with stable collection of receivables and improving management of payables. The company may consider focusing on optimizing its inventory turnover to free up capital and improve liquidity further.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and cash flows.

1. Days of Inventory on Hand (DOH): This ratio measures how efficiently a company manages its inventory. Korn Ferry's DOH has been increasing over the past five years, from 6.20 days in 2020 to 7.99 days in 2024. This trend indicates that the company may be holding more inventory relative to its sales, which could tie up capital and potentially lead to higher carrying costs.

2. Days of Sales Outstanding (DSO): DSO indicates the average number of days it takes for a company to collect its accounts receivable. Korn Ferry's DSO has fluctuated over the years, peaking at 89.97 days in 2021 and decreasing to 70.53 days in 2024. A lower DSO suggests the company is collecting payments from customers more quickly, which is a positive sign for its cash flow and liquidity.

3. Number of Days of Payables: This ratio reflects how long a company takes to pay its suppliers. Korn Ferry has been managing its payables efficiently, with the number of days of payables decreasing from 10.55 days in 2020 to 8.31 days in 2024. A lower number of days of payables indicates that the company is paying its obligations more quickly, potentially improving its relationships with suppliers.

Overall, Korn Ferry's activity ratios show mixed performance. While the company has improved its collection of receivables and management of payables, it may need to address its increasing days of inventory on hand to optimize its working capital management and efficiency.

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Long-term

The fixed asset turnover ratio for Korn Ferry has remained relatively stable over the past five years, ranging between 13.81 and 19.14, with the lowest value in 2021 and the highest in 2022. This indicates that Korn Ferry has been effective in generating revenue from its fixed assets, although there has been some fluctuation in efficiency over the years.

On the other hand, the total asset turnover ratio has shown more variability, with values ranging from 0.60 to 0.80. It is notable that the ratio was lowest in 2021 and highest in 2023. This suggests that Korn Ferry's ability to generate sales from all its assets, including fixed and current assets, has been somewhat inconsistent over the years.

In general, the fixed asset turnover ratio suggests that Korn Ferry has been efficient in utilizing its fixed assets to generate revenue, while the total asset turnover ratio indicates varying levels of efficiency in utilizing all assets to generate sales. Further analysis would be needed to understand the factors contributing to these fluctuations and to evaluate the overall effectiveness of Korn Ferry's long-term asset management strategies.