Korn Ferry (KFY)

The liquidity ratios for Korn Ferry over the specified period demonstrate notable variations and trends in the company's short-term financial health.

Current Ratio: This ratio measures the company's ability to meet its short-term obligations with its current assets. From July 31, 2020, to October 31, 2024, the current ratio fluctuated within a relatively stable range, generally between approximately 1.68 and 2.34. Early in the period, the ratio was comfortably above 2, indicating a solid buffer of current assets over current liabilities. However, a marked decline occurs by July 31, 2023, when the ratio drops below zero at -0.84—an anomaly likely attributable to specific accounting adjustments or extraordinary circumstances. Subsequently, the current ratio recovers to around 1.83 by January 31, 2024, and remains within a moderate range of roughly 1.68 to 2.15 through April 2025, suggesting a generally adequate liquidity position despite the earlier dip.

Quick Ratio: This more conservative measure excludes inventory and other less liquid current assets, providing insight into the company's ability to satisfy short-term liabilities with its most liquid assets. The quick ratio exhibits a pattern similar to the current ratio, with values mostly hovering between approximately 1.49 and 2.11 during the period. The ratios suggest consistent liquidity, though there is a decline observed around April 2023 (to 1.49), with a subsequent recovery to above 1.7 towards the end of the period. Overall, the quick ratio indicates that Korn Ferry maintains sufficient liquid assets to cover immediate liabilities, with minor fluctuations.

Cash Ratio: The most stringent liquidity measure, reflecting the proportion of current liabilities covered solely by cash and cash equivalents. The cash ratio remains relatively stable throughout the period, generally ranging from approximately 0.85 to 1.23. A decline is noticeable around October 2022, when it dips to 0.86, followed by a gradual recovery above 1.0 into 2024. This pattern indicates that Korn Ferry typically maintains a cash position adequate to meet short-term liabilities exclusively through cash holdings, though there are periods of slightly lower liquidity, reflecting prudent cash management.

Summary: Overall, Korn Ferry has maintained solid liquidity ratios throughout most of the period under review, with values generally within acceptable thresholds (current ratio above 1.5, quick ratio above 1.0, and cash ratio near or above 1.0). The notable exception is the temporary negative current ratio in July 2023, which suggests an unusual accounting event or liquidity challenge during that time. Post-2023, the ratios recover and stabilize, indicating resilience and effective liquidity management. The ratios reflect a company capable of meeting its short-term obligations, with a willingness to adjust liquidity levels in response to financial circumstances over time.

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Additional liquidity measure

The data provided illustrates the evolution of Korn Ferry’s cash conversion cycle (CCC) over a period spanning from July 2020 to April 2025. The CCC values exhibit significant fluctuations across this timeframe, reflecting variations in the efficiency of the company's working capital management.

Initially, in July 2020, the CCC was approximately 68.79 days. The cycle showed a slight decline to around 67.47 days by October 2020, indicating marginal improvements. The decrease became more pronounced by January 2021, reaching approximately 56.87 days, suggesting increased efficiency in converting investments into cash. The most substantial positive movement occurred by April 2021, where the CCC sharply decreased to approximately 26.43 days, indicating a notably shorter cycle and more efficient cash flow management.

Following this period of improvement, the CCC reverted to higher levels, reaching approximately 66.80 days in July 2021, and then further increased to about 80.53 days by October 2021. This upward trend signifies a deterioration in cash conversion efficiency during the latter part of 2021.

Interestingly, in January 2022, the CCC turned negative at approximately -63.54 days, an unusual phenomenon indicating that the company was collecting cash from clients before disbursing payments for its operational expenses—an advantageous position of working capital. This negative cycle persisted into April 2022, where it was around -55.86 days. Subsequent periods saw the cycle returning to positive values, with the cycle reaching approximately 80.35 days in July 2022 and maintaining elevated levels through October 2022 at about 81.60 days.

In early 2023, a notable shift occurred: the CCC dropped to approximately 19.22 days in January, suggesting a remarkable increase in operational efficiency. However, this improvement was not sustained, as by April 2023, the cycle increased again to approximately 66.90 days. For the remainder of 2023 and into early 2024, the CCC stabilized within the range of approximately 22.33 days to 71.44 days, indicating a period of relative variability but overall moderate cycle lengths.

From January 2024 onward, the CCC fluctuated around 61 to 69 days through October 2024 and into April 2025. While these figures reflect some consistency, they also suggest ongoing variability in the company's working capital management strategies.

In summary, Korn Ferry's cash conversion cycle has experienced considerable volatility over the analyzed period. Periods of notably reduced cycle times, including negative values in early 2022, have likely corresponded with improved receivables collection and payables management. Conversely, the periods with higher CCC values may indicate extended cycles of accounts receivable, accounts payable, or inventory management challenges. The shifts reflect a dynamic approach to working capital optimization, with recent data suggesting a stabilization around moderate cycle durations.