Korn Ferry (KFY)
Cash conversion cycle
| Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | Apr 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 7.99 | 7.59 | 7.28 | 6.20 |
| Days of sales outstanding (DSO) | days | 70.53 | 72.51 | 81.47 | 89.97 | 73.30 |
| Number of days of payables | days | 8.31 | 8.67 | 9.25 | 10.66 | 10.55 |
| Cash conversion cycle | days | 62.23 | 71.84 | 79.80 | 86.59 | 68.95 |
April 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 70.53 – 8.31
= 62.23
The cash conversion cycle of Korn Ferry has shown a fluctuating trend over the five-year period analyzed. Starting at 68.95 days in April 2020, it increased to 86.59 days in April 2021 before decreasing to 62.23 days in April 2024. This indicates that the company has been able to effectively manage its cash conversion cycle in recent years, improving its operating efficiency.
A lower cash conversion cycle suggests that Korn Ferry is able to efficiently convert its investments in inventory and receivables into cash. This could be a positive sign of effective inventory management, prompt collection of receivables, and efficient payment of payables. It indicates that the company is able to generate cash quickly from its operational activities, which can be beneficial for sustaining and growing the business.
On the other hand, a longer cash conversion cycle can indicate inefficiencies in the company's operations, such as slow-moving inventory, delays in collecting payments from customers, or extended payment terms with suppliers. While the increasing trend up to 2021 may have raised concerns, the subsequent decrease in the cash conversion cycle is a positive development.
Overall, the downward trend in the cash conversion cycle for Korn Ferry suggests improvements in its working capital management and operational efficiency, which can contribute to its financial health and performance. Continued focus on optimizing the cash conversion cycle can help the company enhance its liquidity and profitability in the future.
Peer comparison
Apr 30, 2024