CarMax Inc (KMX)

Days of sales outstanding (DSO)

		Feb 29, 2024	Feb 28, 2023	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020
Receivables turnover		1.59	1.83	2.05	1.38	106.34
DSO	days	229.24	199.55	178.30	263.76	3.43

February 29, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 1.59
= 229.24

Days Sales Outstanding (DSO) is a measure that indicates the average number of days it takes for a company to collect payment after making a sale. A lower DSO value is generally favorable as it suggests faster collections and better cash flow management.

CarMax Inc's DSO has shown fluctuation over the past five years. In FY 2020, the DSO was exceptionally low at 3.43 days, indicating efficient collection of receivables. However, in FY 2021, the DSO spiked to 263.76 days, suggesting a significant delay in collecting payments, which could be a concern for liquidity.

In the following years, CarMax Inc managed to bring down the DSO, with 2022 and 2023 showing improvements to 178.30 days and 199.55 days, respectively. The latest DSO for FY 2024 is reported at 229.24 days, indicating a slight increase compared to the previous year. This increase could be a potential red flag, signaling a slowdown in collections and possibly impacting the company's cash flow.

Overall, it is crucial for CarMax Inc to monitor its DSO closely and strive to optimize collection processes to ensure timely inflow of cash and maintain financial stability.