CarMax Inc (KMX)

Days of sales outstanding (DSO)

		Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 31, 2019
Receivables turnover		1.59	1.59	1.61	1.69	1.83	1.97	2.11	2.09	2.05	1.90	1.72	1.61	1.38	1.40	1.39	1.40	106.34	112.48	110.69	117.48
DSO	days	229.24	228.88	226.72	216.28	199.55	185.30	173.37	174.37	178.30	192.49	211.60	227.17	263.76	260.98	263.15	260.77	3.43	3.25	3.30	3.11

February 29, 2024 calculation

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

Days Sales Outstanding (DSO) is a financial ratio used to measure the average number of days it takes for a company to collect revenue after a sale is made. A lower DSO indicates that a company is collecting revenue more quickly, while a higher DSO suggests that the company may be facing challenges in collecting payments from customers.

Analyzing CarMax Inc's DSO over the past few quarters, we can observe fluctuations in the trend. In the most recent quarter, ending on February 29, 2024, the DSO increased to 229.24 days, indicating a longer period for the company to collect revenue from its sales compared to the previous quarters. This increase may raise concerns about CarMax's collections process, as a higher DSO can lead to cash flow issues and impact the company's liquidity.

Looking back over the past year, there has been a general increasing trend in DSO, with occasional fluctuations. This suggests that CarMax may be experiencing challenges in managing its accounts receivable and collecting payments efficiently. It is important for the company to address these issues and take proactive measures to improve its collections process in order to optimize its cash flow and overall financial performance.

Further analysis and comparison of CarMax's DSO with industry benchmarks and competitors' performance would provide a more comprehensive understanding of the company's efficiency in collecting revenue and managing working capital effectively. Monitoring changes in DSO over time can help identify potential areas for improvement and drive strategic decision-making in managing the company's financial health.