Korn Ferry (KFY)

The liquidity position of Korn Ferry, as indicated by the provided financial ratios over the period from April 2021 to April 2025, demonstrates several key trends and considerations.

Current Ratio Analysis:
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, shows a declining trend from 1.98 in April 2021 to 1.68 in April 2023. This decline suggests a reduction in liquidity cushion; however, the ratio remains above 1.5 throughout this period, indicating that the company continues to possess sufficiently liquid assets relative to its current liabilities. By April 2024 and 2025, the ratio recovers slightly to 1.79 and 1.83, respectively, which reflect a modest improvement in liquidity.

Quick Ratio Analysis:
The quick ratio, which adjusts the current ratio by excluding inventories (less relevant for service-oriented firms like Korn Ferry), also displays a downward trend from 1.82 in April 2021 to a low of 1.49 in April 2023. This decline indicates a decrease in the company's more liquid assets available to cover immediate liabilities. Nonetheless, the ratio remains comfortably above 1.4 in subsequent periods, reaching 1.72 in April 2025, signaling ongoing liquidity strength in a more immediate sense.

Cash Ratio Analysis:
The cash ratio, representing the most conservative measure of liquidity based solely on cash and cash equivalents, exhibits a downward trend from 1.22 in April 2021 to 0.91 in April 2023. The decline below 1.00 highlights a reduction in cash holdings relative to current liabilities, potentially signaling tightening cash liquidity or strategic deployment of cash resources. However, the ratio improves again in the latter years, reaching 1.05 in April 2024 and 1.09 in April 2025, indicating a recovery in cash reserves.

Overall Assessment:
Throughout the analyzed period, Korn Ferry's liquidity ratios reflect a moderate but noticeable decline in liquidity from 2021 through 2023, followed by stabilization and slight improvement in the ensuing years. Despite the observed decreases, all ratios consistently remain above critical thresholds (such as 1.0 for current and quick ratios and 0.5 for the cash ratio), indicating that the company maintains sufficient liquidity buffers to meet short-term liabilities. The pattern suggests a temporary tightening of liquidity positions, possibly due to operational adjustments or strategic initiatives, which the company appears to manage effectively given the subsequent recovery in ratios.

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Additional liquidity measure

The analysis of Korn Ferry's cash conversion cycle (CCC) over the specified period reveals a consistent upward trend in the metric from April 30, 2021, to April 30, 2025. Specifically, the CCC was 26.43 days in 2021, which increased substantially to 55.98 days in 2022. This upward trajectory continued into 2023, where the cycle reached 66.90 days, followed by marginal increases to 67.55 days in 2024 and 69.28 days in 2025.

The progression indicates that the firm has been experiencing increasingly extended periods to convert its investments in inventory and receivables into cash, relative to its payables. Such a trend suggests that Korn Ferry may be taking longer to collect receivables, has a longer inventory holding period, or faces delays in its payment obligations to suppliers, or a combination of these factors.

The rising trend in the CCC over the analyzed period highlights a potential weakening in the company's working capital efficiency. It may imply increased working capital tied up in operations, which could exert pressure on liquidity positions if not managed appropriately. This pattern warrants further investigation into the specific components—such as Days Sales Outstanding, Days Inventory Outstanding, and Days Payables Outstanding—to identify the underlying causes of longer cash conversion cycles.

Overall, the steady increase from approximately 26 days in 2021 to over 69 days in 2025 reflects a significant shift in operational efficiency and cash flow dynamics that warrants close monitoring to ensure sustainable financial management.