Carmax

Key Performance Metrics

  • The review of Net Profit Margin witnessed a declining trend. The Net Profit Margin declined from64% in 2019 to 1.63% in 2022.
  • The average EBIT Margin for the period under analysis was 5.14%, with 2022 and 2018 performing the worst and best,
  • In the current year, Carmax was able to cover its interest liabilities 40 times in the current year- compared to 2018 when it was 15.68 times.
  • The Capital turnover stood at66 times in 2021 from 5.28 in 2017, implying a low performance on Capital of the business in relation to revenue.

Profitability

  • The revenue of Carmax has decreased/increased year on year. The revenue decreased/increased by 81% between 2018 and 2019 and a further negative of 6.74% decrease/increase was recorded between 2019 and 2020. There also occurred a/an decrease/increase of a negative 6.95% between 2021 and 2022 (the current period).
  • Carmax’s performance in profitability looks bad/good as the return on capital employed also recorded bad/good performance during the period of analysis.

Liquidity

  • The company’s result in liquidity looks strong, as current ratio increased from 60:1 to 2.45:1 on the last year. Which implies that the company [does not have]/has enough assets to settle its current liabilities.

Capital Structure

  • Carmax is both equity and debt financed.
  • The debt-to-equity (D/E) ratio has been falling year on year. The gearing position of the company appears to be high as it stood at 322% in the current year.

Source: Carmax Annual Report

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