Dream Finders Homes Inc (DFH)

Working capital turnover

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021
Revenue (ttm)	US$ in thousands	4,028,420	3,917,380	3,806,969	3,748,589	3,710,059	3,599,898	3,447,693	3,342,339	3,094,959	2,672,274	2,244,416	1,923,910
Total current assets	US$ in thousands	2,054,640	1,946,850	1,763,970	1,745,910	1,564,300	1,504,800	1,405,260	1,539,640	1,494,030	1,338,300	1,212,220	1,293,890	752,031	637,149	592,678
Total current liabilities	US$ in thousands	1,161,380	890,876	710,288	531,584	555,512	875,672	915,992	968,448	975,000	875,000	770,000	760,000	440,000	365,000	320,000
Working capital turnover		4.51	3.71	3.61	3.09	3.68	5.72	7.05	5.85	5.96	5.77	5.08	3.60

September 30, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $4,028,420K ÷ ($2,054,640K – $1,161,380K)
= 4.51

The working capital turnover ratio reflects how efficiently Dream Finders Homes Inc is utilizing its working capital resources to generate revenue. The ratio is calculated by dividing net sales by average working capital, where working capital is the difference between current assets and current liabilities.

Analyzing the trend in Dream Finders Homes Inc's working capital turnover ratio over the specified period, we observe that the ratio has fluctuated significantly. Generally, a higher working capital turnover ratio indicates a more efficient use of working capital.

1. The ratio peaked at 7.05 in March 2023, which suggests that the company was very efficient in utilizing its working capital to generate sales revenue during that period.

2. Subsequently, the ratio declined in the following quarters before reaching its lowest point of 3.09 in December 2023. This significant decrease indicates a potential deterioration in the company's working capital management efficiency during that quarter.

3. The ratio then rebounded in the first two quarters of 2024, indicating improvement in the company's working capital turnover efficiency. However, it is important to note that the ratio did not surpass the peak achieved in March 2023.

4. Overall, the fluctuation in Dream Finders Homes Inc's working capital turnover ratio suggests varying levels of effectiveness in managing working capital to drive sales revenue during the analyzed period.

Based on this analysis, it is evident that Dream Finders Homes Inc should focus on maintaining a consistent and efficient use of its working capital to support sustainable revenue generation in the long term.