CarMax Inc (KMX)

Short-term

Turnover ratios

CarMax Inc's activity ratios provide insights into how efficiently the company manages its assets and operations.

1. Inventory turnover: CarMax's inventory turnover has been relatively consistent over the periods, ranging from 5.25 to 8.42. This indicates that CarMax efficiently manages its inventory levels, with a higher turnover generally being favorable as it signifies faster sales of inventory.

2. Receivables turnover: CarMax's receivables turnover has fluctuated over the periods, with a significant increase in the most recent period. A higher turnover ratio indicates that CarMax is collecting its receivables more quickly, which is positive for cash flow and liquidity.

3. Payables turnover: CarMax's payables turnover has also varied over the periods, with some fluctuations in the ratios. A higher payables turnover ratio suggests that CarMax is paying its suppliers more quickly, which can be beneficial for maintaining good relationships and potentially negotiating favorable terms.

4. Working capital turnover: CarMax's working capital turnover has shown some fluctuations over the periods, reflecting changes in the efficiency of utilizing working capital to generate revenue. A higher turnover ratio indicates that CarMax is effectively using its working capital to support operations and generate sales.

Overall, analyzing these activity ratios provides valuable insights into how CarMax manages its inventory, receivables, payables, and working capital, which are key components of its operational efficiency and financial health.

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Average number of days

Days of Inventory on Hand (DOH) for CarMax Inc have shown fluctuations over the periods analyzed, ranging from a low of 43.36 days to a high of 69.54 days. On average, the company holds inventory for around 56 days before selling it. This indicates that CarMax manages its inventory efficiently, with lower DOH suggesting faster inventory turnover.

Days of Sales Outstanding (DSO) have also varied significantly, with the number of days it takes for CarMax to collect payment on credit sales ranging from 3.11 days to 263.76 days. The average DSO for the company is approximately 199 days. A lower DSO is preferable as it indicates quicker collection of receivables and better cash flow management.

Number of Days of Payables indicates how many days it takes for CarMax to pay its suppliers. The company has shown varying payment periods, from a low of 8.99 days to a high of 18.87 days. On average, CarMax takes around 13 days to settle its payables. A longer period of payables suggests that the company is effectively using trade credit to manage its cash flow.

Overall, CarMax Inc's activity ratios reflect fluctuations in its inventory management, receivables collection, and payables payment over the periods analyzed. The company's ability to efficiently manage its assets and liabilities plays a crucial role in its financial health and operational efficiency.

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Long-term

CarMax Inc's fixed asset turnover ratio has generally shown a decreasing trend over the periods, indicating that the company is generating less revenue relative to its investment in fixed assets. This may suggest that CarMax could be facing inefficiencies in utilizing its fixed assets effectively to generate sales.

On the other hand, the total asset turnover ratio has also decreased over the periods, albeit not as steeply as the fixed asset turnover ratio. This could imply that while CarMax is generating less revenue in relation to its total assets, the decline is not solely attributed to fixed assets but potentially other factors such as current assets or liabilities.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios may indicate a decrease in operational efficiency and effectiveness in generating sales from the company's assets. Further analysis and investigation into the underlying reasons for these trends would be necessary to understand the full picture of CarMax Inc's long-term activity performance.