Korn Ferry (KFY)

Short-term

Turnover ratios

The analysis of Korn Ferry's activity ratios over the specified periods reveals trends and shifts in operational efficiency and working capital management.

Inventory Turnover:
The data indicates fluctuations in inventory turnover ratios. From July 2020 to October 2020, a slight increase from 3.39 to 3.45 was observed, suggesting marginally improved inventory management. Subsequently, there was a decline through January 2021 to July 2021, reaching approximately 2.18, indicating a slower turnover rate and potentially increased inventory holding periods. After partial recovery to 2.69 in October 2021, data for inventory turnover becomes intermittent. Notably, a significant upward trend begins in April 2022 with a ratio of 5.42, culminating in a hypothetical value of 5.42 in April 2024. This sharp increase reflects a substantial enhancement in inventory management efficiency, possibly due to operational restructuring or product line adjustments, leading to faster inventory turnover.

Receivables Turnover:
This ratio demonstrates relative stability with minor oscillations. Starting at 4.87 in July 2020, it dips to 3.73 in October 2021 before gradually increasing again. The ratio improves notably after April 2023, reaching 5.03, indicating a more efficient collection process and shorter receivables periods. The steady upward trend through the subsequent periods, including values exceeding 4.8 in late 2024, suggests ongoing efforts to accelerate receivables collection, thereby enhancing liquidity.

Payables Turnover:
A marked upward trend is evident in payables turnover ratios over time. Starting at 3.21 in July 2020, the ratio generally increases, reaching notably high levels—such as 48.42 in October 2024—indicative of Korn Ferry's tendency to pay suppliers more promptly or negotiate shorter payment terms. The rapid escalation from around 6 in late 2023 to over 48 in late 2024 reflects a significant shift in accounts payable behavior, possibly driven by strategic payments management or changes in supplier agreements. This increase suggests a reduction in days payable outstanding, which can impact working capital but may also reflect improved cash management or contractual adjustments.

Working Capital Turnover:
This ratio shows a generally increasing trend from July 2020 through 2023, rising from 3.04 to a peak of approximately 4.33 in October 2023, hinting at more effective utilization of working capital. Post-2023, the ratio declines slightly, stabilizing around 3.5 to 3.7 in early 2025, signaling a possible normalization or adjustment phase following earlier improvements.

Summary:
Overall, Korn Ferry exhibits signs of improving operational efficiency, particularly in inventory and receivables management, especially noticeable from mid-2022 onward. The significant acceleration in payables turnover in late 2023 and 2024 suggests a strategic focus on liquidity management and cash flow optimization. These trends reflect a company actively managing its working capital components to adapt to evolving operational and strategic needs.

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Average number of days

The analysis of Korn Ferry’s activity ratios over the provided period reveals several noteworthy trends and patterns across inventory management, receivables, and payables.

Days of Inventory on Hand (DOH):
The inventory turnover period experienced fluctuations from July 2020 through April 2024. Initial data indicate a relatively stable but high DOH around 107.5 days in July 2020, decreasing slightly to approximately 105.89 days in October 2020. Subsequently, there was a significant increase, peaking at 167.28 days in July 2021, suggesting a substantial buildup of inventory or potential delays in inventory turnover during that period. After this peak, the DOH decreased, reaching approximately 87.95 days in October 2022 and further declining to about 67.30 days by April 2023. The absence of data beyond April 2023 limits insights into subsequent periods; however, the downward trend from 2021 suggests efforts to optimize inventory management or shifts in business operations affecting inventory levels.

Days of Sales Outstanding (DSO):
Receivables collection periods demonstrated relatively stable yet fluctuating patterns. Initially, in July 2020, DSO was approximately 74.91 days, rising to 97.92 days in October 2021, indicating a lengthening in collection cycles. During 2022, DSO generally decreased, hovering around 84 days, with some minor fluctuations. A notable reduction occurred in April 2023, when DSO dropped significantly to 72.60 days, implying improved collection efficiency. The subsequent increases and decreases through 2023 and 2024, maintaining within roughly 75 to 89 days, reflect some variability in receivables management but generally stable collection periods over the recent periods.

Number of Days of Payables:
The payable periods exhibited a clear downward trend, reflecting accelerated payment cycles over the analyzed timeframe. Starting from roughly 113.64 days in July 2020, the duration decreased progressively, reaching a low of approximately 7.54 days in October 2024. This suggests the company has been increasingly paying its suppliers more promptly, possibly due to improved cash flow, renegotiated terms, or strategic management of liabilities. The fluctuations before reaching the lowest point are consistent with operational adjustments, but the overall trend indicates a significant reduction in accounts payable deferral.

Summary of Key Insights:
- The substantial peak in inventory days in July 2021 may indicate inventory accumulation, possibly due to strategic stockpiling or operational delays, followed by a consistent reduction suggesting enhanced inventory turnover or tighter management post-2021.
- Receivables management has shown improvement, particularly evident by the sharp decrease in DSO in April 2023, implying better collection processes.
- Payables have been paid more quickly over time, highlighting a shift towards faster settlement of liabilities, which could affect cash management and working capital cycles.

Overall, Korn Ferry’s activity ratios demonstrate a trajectory toward more efficient working capital management, characterized by reduced inventory holding periods, stable and improving receivables collection times, and increasingly prompt payments to suppliers. These trends are indicative of efforts to optimize liquidity and operational efficiency.

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Long-term

The analysis of Korn Ferry’s long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, reveals varying levels of asset efficiency over the provided period.

Fixed Asset Turnover experienced significant fluctuations between July 2020 and October 2023. Initially, the ratio was 5.51, indicating moderate utilization of fixed assets to generate revenue. It then increased sharply, reaching a peak of 18.86 in January 2022, suggesting a period of highly efficient fixed asset utilization, potentially reflecting strategic asset management or increased revenue generated per fixed asset. However, subsequent periods showed considerable variability; after April 2022, the ratio declined to approximately 9.36 by October 2022 before stabilizing around 9.86 in October 2023. This trend indicates a decrease from peak efficiency levels but suggests that fixed assets continue to generate revenue effectively, albeit at lower rates compared to the peak period.

Total Asset Turnover displayed a more stable pattern but with an overall slight upward trend until October 2022. It started at 0.70 in July 2020, then declined slightly over the subsequent periods, reaching a low of 0.60 in January and April 2021. From mid-2021 onwards, the ratio generally increased, reaching a peak of 0.87 in July and October 2022. This improvement indicates enhanced overall asset utilization to generate revenue during this period. After October 2022, the ratio fluctuated modestly, and by October 2023, it settled at 0.85, demonstrating sustained efficiency. The subsequent projections suggest a gradual slight decrease extending into 2024 and beyond, with ratios approaching 0.75–0.80, reflecting possible normalization or slight declines in asset utilization efficiency.

In summary, Korn Ferry’s fixed asset efficiency saw a notable peak around early 2022 with fluctuations thereafter, whereas the total asset turnover exhibited an overall upward trend until late 2022, followed by minor fluctuations. These patterns collectively indicate periods of heightened operational efficiency that were succeeded by stabilization or slight declines, consistent with strategic adjustments or changes in asset management during the period.