CarMax Inc (KMX)

Short-term

Turnover ratios

CarMax Inc's inventory turnover ratio has shown fluctuations over the years, ranging from a low of 5.25 to a high of 8.42. This ratio indicates the number of times CarMax's inventory is sold and replaced over a given period, reflecting the efficiency of managing inventory levels. The upward trend in recent periods suggests an improvement in inventory management efficiency.

The receivables turnover and payables turnover ratios are not available for analysis, indicating that data on how quickly CarMax collects receivables from customers and pays its suppliers is not provided.

The working capital turnover ratio, which measures how efficiently CarMax utilizes its working capital to generate sales, has also shown variability but generally positive performance. The ratio has increased from 6.73 to 9.58, indicating that CarMax is effectively using its working capital to generate sales revenue, with a peak value of 10.39 observed on November 30, 2022. This suggests that CarMax has been able to generate more sales revenue relative to its working capital over the years.

In conclusion, CarMax's inventory turnover has exhibited positive trends, and the working capital turnover ratio indicates efficient utilization of working capital. However, the lack of data on receivables and payables turnover limits a comprehensive assessment of the company's overall activity ratios.

---

Average number of days

Based on the provided data, let's analyze the activity ratios for CarMax Inc:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand indicate how many days, on average, inventory sits in the warehouse before it is sold.
- CarMax's DOH has fluctuated over the years, ranging from a low of 43.36 days on November 30, 2022, to a high of 69.54 days on February 28, 2021.
- A lower DOH value, such as 43.36 days on November 30, 2022, suggests efficient inventory management and faster inventory turnover.
- The decreasing trend in DOH from November 30, 2022 (43.36 days) to May 31, 2024 (58.84 days) indicates potential improvement in inventory turnover efficiency.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding show the average number of days it takes for the company to collect revenue after making a sale.
- The data for DSO is not available in the provided information, which may indicate that detailed accounts receivable information was not disclosed.

3. Number of Days of Payables:
- The number of days of payables refers to the average number of days a company takes to pay its suppliers.
- The data for the number of days of payables is not available in the provided information, which may indicate that detailed accounts payable information was not disclosed.

Overall, based on the available data on the Days of Inventory on Hand, it appears that CarMax Inc has shown some fluctuations in managing its inventory efficiently, with potential improvements in inventory turnover observed in the later periods. However, a more comprehensive analysis incorporating accounts receivable and accounts payable information would provide a more holistic view of CarMax's activity ratios and its operational efficiency.

---

Long-term

CarMax Inc's fixed asset turnover ratio has exhibited an increasing trend from 5.93 in May 2020 to 8.02 in May 2023, before declining slightly to 6.62 in August 2023 and further to 6.41 in November 2023. The ratio measures the efficiency of the company in generating sales from its investments in fixed assets. The peak value of 10.28 in May 2022 suggests that CarMax was able to generate significant revenues relative to its fixed asset base during that period.

On the other hand, the total asset turnover ratio, which indicates how effectively the company utilizes all its assets to generate revenue, fluctuated over the years. Starting at 0.91 in May 2020, the ratio increased to 1.27 in August 2022, indicating improved efficiency in asset utilization. However, the ratio declined to 0.96 in February 2025. This suggests that while CarMax may have efficiently utilized its total assets to generate revenue during certain periods, the efficiency decreased towards the end of the period under review.

In conclusion, the fixed asset turnover ratio generally improved over the years, indicating a better utilization of fixed assets to generate sales. In contrast, the total asset turnover ratio exhibited fluctuations, signifying varying levels of efficiency in using all assets to drive revenue generation. This analysis highlights the importance of monitoring both ratios to assess CarMax's asset management effectiveness and operational efficiency.