Predicting Financial Crisis From KB HOME's (NYS: KBH) Financial Statements
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Looking at the attached graphs and financials, please discuss how you could have used accounting information to predict the Financial Crisis of 2008. Focus your discussion on KB Home's inventory, earnings, cash flow and stock price.
Provide a short paragraph explaining how, just by looking at the attached worksheet and stock prices, you could have predicted the 2008 crisis.
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Solution Summary
The solution explains how the Financial Crisis of 2008 could have been predicted by looking at KB Home's financial statements.
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KB Home's balance sheet shows that the company's inventories almost double from 2002 to 2006. The inventories balance steadily increased within this period. In 2007, the company's cash balance ballooned to an amount almost equal to the cash balances from 2002 to 2006 combined. However, the company's cash flows didn't fluctuate as much as ...
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