CarMax Inc (KMX)

Inventory turnover

		Nov 30, 2024	Aug 31, 2024	May 31, 2024	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
Cost of revenue (ttm)	US$ in thousands	23,292,130	23,282,090	23,406,100	23,888,200	23,893,930	24,287,520	25,318,110	26,884,670	28,748,870	30,510,800	30,276,020	28,612,880	26,160,060	23,022,370	20,469,510	16,571,020	16,337,760	15,960,630	15,848,310	17,597,650
Inventory	US$ in thousands	3,665,160	3,397,750	3,772,880	3,678,070	3,638,950	3,839,290	4,081,220	3,726,140	3,414,940	4,671,680	4,691,080	5,124,570	4,659,460	4,105,460	3,248,850	3,157,160	2,780,200	2,824,960	1,899,430	2,846,420
Inventory turnover		6.36	6.85	6.20	6.49	6.57	6.33	6.20	7.22	8.42	6.53	6.45	5.58	5.61	5.61	6.30	5.25	5.88	5.65	8.34	6.18

November 30, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $23,292,130K ÷ $3,665,160K
= 6.36

CarMax Inc's inventory turnover has shown fluctuation over the past few years, ranging from a low of 5.25 times in February 2021 to a high of 8.42 times in November 2022. The inventory turnover ratio indicates how efficiently the company is managing its inventory by measuring how many times, on average, the inventory is sold and replaced within a specific period.

A higher inventory turnover ratio typically signifies that CarMax is selling its inventory more quickly, which can be positive as it reduces carrying costs and indicates strong demand for its products. However, a very high ratio could also suggest that the company is understocked and may risk losing out on potential sales.

On the other hand, a lower inventory turnover ratio could indicate inefficiencies in managing inventory, such as overstocking or slow-moving products. This can tie up capital and lead to potential obsolescence or carrying costs.

In analyzing CarMax Inc's inventory turnover, it's essential to consider industry benchmarks and historical trends to assess the effectiveness of the company's inventory management strategies and their impact on overall financial performance.