Korn Ferry (KFY)

Short-term

Turnover ratios

The analysis of Korn Ferry's activity ratios over the specified periods reveals several noteworthy trends and patterns:

Inventory Turnover:
The inventory turnover ratio demonstrates a declining trend from April 2020 through April 2021, declining from 4.86 to 2.67, indicating a reduction in the frequency with which inventory is sold and replaced. A late 2021 rebound is observed, with the ratio increasing to 2.69, and subsequent data (available from July 2022 onward) shows a significant upward movement, culminating in a peak of 5.42 in April 2023. This pattern suggests an improvement in inventory management efficiencies or a shift in operational strategies that favor quicker turnover of inventory. The data indicates that after a period of decrease—possibly reflecting operational challenges or changes in product lines—the company has been able to enhance its inventory movement efficiency in recent periods.

Receivables Turnover:
Receivables turnover ratios fluctuate within a relatively stable range, generally between 3.47 and 4.81 throughout the period. The highest observed value is 4.81 in April 2024, representing improved collection efficiency, while the lowest point is 3.47 in January 2021. The trend depicts a generally steady collection cycle with slight improvements over time, implying that Korn Ferry maintains effective receivables management. The gradual upward trend in recent months favors a perception of improved cash flow processes, with the ratio consistently above 4, indicating efficient collection periods typically lasting around 80-90 days.

Payables Turnover:
Payables turnover shows substantial variation across the analyzed periods. Early data (2020 and 2021) presents ratios below 3, with some fluctuations, indicating longer periods to settle obligations. Starting around January 2023, a marked increase occurs, with the ratio rising dramatically to 5.25, then further surging to 48.42 by October 2024. This sharp increase signifies that Korn Ferry is paying its suppliers at a much faster rate in recent periods, or possibly accelerating payment processes to capitalize on early payment discounts, or reflecting changes in contractual payment terms. The significant rate in late 2024 suggests a potential shift in payment strategy or operational adjustments affecting accounts payable cycles.

Working Capital Turnover:
The working capital turnover ratio exhibits a relatively stable pattern, ranging from approximately 2.47 to 4.32 over the observed intervals. The ratio increases slightly in early 2022, peaking around 4.32 in April 2023, before declining somewhat in subsequent periods. The data signifies that Korn Ferry’s utilization of working capital to generate sales remains consistent, with periods of marginal improvement, indicating maintained efficiency in asset management related to operations. Recent figures (October 2024) show a ratio of 3.59, suggesting steady or slightly improved efficiency in deploying working capital to support sales activities.

In summary, Korn Ferry has experienced notable improvements in inventory and payable management in recent periods, with enhanced inventory turnover and significantly accelerated payables turnover. Receivables management remains steady with modest improvements, and working capital efficiency has been relatively stable. These trends collectively indicate optimized operational efficiencies, a strategic focus on liquidity management, and potential adaptations to changing market or internal conditions.

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Average number of days

The activity ratios of Korn Ferry, as reflected by the provided data, portray a nuanced overview of operational efficiency over the observed period.

Days of Inventory on Hand (DOH):
From April 2020 to October 2021, DOH exhibits a rising trend, increasing from approximately 75 days to a peak of 167.28 days. This escalation suggests a significant accumulation of inventory or work-in-progress during this period, potentially indicating slower inventory turnover or challenges in inventory management. Post-October 2021, data becomes sparse, with notable gaps until April 2023, where DOH decreases markedly to approximately 67.30 days. This reduction implies an improvement in inventory turnover efficiency, possibly reflecting operational adjustments or shifts in supply chain dynamics. Subsequent data points are absent or unspecified, limiting further trend analysis.

Days of Sales Outstanding (DSO):
Throughout the period, DSO fluctuates within a range of approximately 75 to 105 days. Early in the timeline (April 2020 to October 2021), DSO increases from about 80.5 to over 105 days, indicating a lengthening of accounts receivable collection periods. This trend may reflect extended credit terms or slower collection processes. However, from April 2022 onward, DSO demonstrates a gradual decline, with figures as low as approximately 75.95 days in April 2024, signaling improved receivables management and faster cash collection.

Number of Days of Payables:
The data on payables shows a high variability over time. Initially, during 2020, payables extend up to roughly 200 days, indicating a tendency to delay payments to suppliers. This lengthening continues into early 2021, with payables reaching around 200 days, potentially reflecting favorable credit terms or strategic postponement of payments. Starting from 2022, there is a consistent downward trend. By October 2023, the number of days payable diminishes to approximately 52 days, and further reduces to around 7.5 days by October 2024, approaching a near-immediate settlement of liabilities. These reductions suggest enhanced liquidity management or a shift in payment policies, perhaps driven by financial constraints or strategic realignment.

Overall Interpretation:
The activity ratios collectively suggest that during the early part of the observed timeline, Korn Ferry experienced extended inventory holding and receivables periods, coupled with prolonged payments to suppliers. Over time, particularly from 2022 onward, there appears to be a concerted effort to optimize operational efficiency—evidenced by reduced inventory days, decreased receivables days, and faster payables cycles. These adjustments could reflect strategic operational improvements, cost control measures, or shifts in business model or financial policy aimed at enhancing liquidity and operational agility.

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Long-term

The analysis of Korn Ferry’s long-term activity ratios reveals notable fluctuations over the observed period, highlighting shifts in asset utilization efficiency.

Fixed Asset Turnover: This ratio measures how effectively the company utilizes its fixed assets to generate revenue. The ratio experienced significant volatility, starting at 13.85 on April 30, 2020, then dropping sharply to 5.51 by July 31, 2020. After this decline, it recovered to 12.95 by October 31, 2020, and maintained similar levels through January 2021. From April 2021 onward, the ratio generally increased, peaking at 18.86 on January 31, 2022. This surge suggests improved efficiency or a reduction in fixed assets relative to revenue. However, subsequent quarters showed a decline, with the ratio decreasing to 9.59 by July 31, 2023, and stabilizing at 9.86 by October 31, 2023. These fluctuations may reflect changes in asset base management, asset depreciation, or shifts in capitalization strategies.

Total Asset Turnover: This ratio indicates how well total assets are being used to generate revenue. It demonstrated a gradual upward trend from 0.72 on April 30, 2020, to a peak of 0.87 on July 31, 2022. After that peak, the ratio exhibited slight variations, settling at 0.85 on October 31, 2023. The trend suggests incremental improvements in overall asset utilization efficiency over time, although the magnitude of change remains relatively moderate. The decline from the peak may signal periods of asset underutilization or strategic investments that temporarily impacted efficiency.

Overall, the long-term activity ratios reflect periods of both operational efficiency gains and challenges. The sharp fluctuations in fixed asset turnover may indicate strategic asset restructuring or impacts from external market conditions, while the steady improvement in total asset turnover suggests a gradual enhancement of asset utilization efficiency. The stabilization in recent periods indicates a possible normalization of operational performance.