CarMax Inc (KMX)

Liquidity ratios

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
Current ratio 2.30 2.25 2.50 2.26 2.45 2.32 2.54 2.60 2.57 2.75 2.72 3.20 2.90 2.74 2.24 2.42 2.60 2.71 2.85 2.39
Quick ratio 0.13 0.24 0.38 0.47 0.29 0.22 0.13 0.16 0.36 0.03 0.04 0.05 0.03 0.03 0.18 0.08 0.16 0.45 0.57 0.04
Cash ratio 0.13 0.24 0.38 0.47 0.29 0.22 0.13 0.16 0.36 0.03 0.04 0.05 0.03 0.03 0.18 0.08 0.16 0.45 0.57 0.04

CarMax Inc's liquidity ratios indicate the company's ability to meet short-term obligations and its overall financial health.

1. Current Ratio: CarMax's current ratio has been fluctuating over the years but generally remains above 2, indicating that the company has more than enough current assets to cover its current liabilities. The ratio has shown some variability but has remained within a comfortable range, which suggests that CarMax has a strong ability to meet its short-term obligations.

2. Quick Ratio: CarMax's quick ratio, also known as the acid-test ratio, has been low in some periods, indicating the company's reliance on inventory or other less liquid current assets. However, the ratio has improved over time, suggesting that CarMax is managing its liquidity better and has a sufficient level of liquid assets to cover its current liabilities.

3. Cash Ratio: CarMax's cash ratio has also shown fluctuations over the years, but it remained relatively low in most periods. This indicates that the company may not have a significant amount of cash on hand to cover its immediate liabilities. However, the ratio has shown improvements in some periods, suggesting that CarMax is managing its cash position more efficiently.

In summary, while CarMax Inc's liquidity ratios have shown some variability, the overall trend indicates a stable financial position with a strong ability to meet its short-term obligations. The company's current ratio is generally healthy, and improvements in the quick and cash ratios over time demonstrate better liquidity management.

Additional liquidity measure

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
Cash conversion cycle days 57.43 53.27 58.84 56.20 55.59 57.70 58.84 50.59 43.36 55.89 56.55 65.37 65.01 65.09 57.93 69.54 62.11 64.60 43.75 59.04

The cash conversion cycle measures the time it takes for a company to sell inventory, collect receivables, and pay suppliers, providing insights into its operational efficiency and liquidity management. Analyzing the data for CarMax Inc, we observe fluctuations in the cash conversion cycle over time:

- The cycle decreased from 59.04 days on February 29, 2020, to 43.75 days on May 31, 2020, indicating a more efficient conversion of inventory to cash during that period.
- However, the cycle increased significantly to 69.54 days by February 28, 2021, suggesting a longer time to convert resources back into cash, potentially straining liquidity.
- Subsequently, the cycle fluctuated around the 60-day mark until August 31, 2022, when it dropped notably to 55.89 days, reflecting improved efficiency in managing cash flow and working capital.
- By November 30, 2024, the cycle had increased slightly to 57.43 days, indicating a longer cash conversion period compared to the previous quarter.

Overall, fluctuations in CarMax Inc's cash conversion cycle suggest varying levels of efficiency in managing working capital and cash flow, highlighting the importance of continuous monitoring and optimization of operational processes to enhance liquidity and financial performance.