Dream Finders Homes Inc (DFH)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 151.70 | 157.57 | 241.77 |
| Days of sales outstanding (DSO) | days | — | — | — |
| Number of days of payables | days | — | — | — |
| Cash conversion cycle | days | 151.70 | 157.57 | 241.77 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 151.70 + — – —
= 151.70
The cash conversion cycle of Dream Finders Homes Inc has shown a decreasing trend over the past three years, indicating an improvement in the efficiency of its working capital management.
In 2021, the company's cash conversion cycle was 241.77 days, suggesting that it took over 8 months to convert its investments in inventory and accounts receivable into cash. This lengthy cycle could have been a concern as it tied up the company's funds for a significant period.
By the end of 2022, the cash conversion cycle had decreased to 157.57 days, reflecting a substantial improvement in the company's working capital efficiency. This reduction indicates a quicker turnover of inventory and receivables, leading to a shorter cash conversion period.
In 2023, Dream Finders Homes Inc further enhanced its working capital efficiency with a cash conversion cycle of 151.70 days. The company was able to convert its investments into cash even more swiftly, demonstrating strong management of its working capital components.
Overall, the decreasing trend in the cash conversion cycle suggests that Dream Finders Homes Inc has been effectively managing its inventory, accounts receivable, and accounts payable to optimize its cash flow and liquidity position. This improvement indicates a positive trend in the company's operational efficiency and financial health.
Peer comparison
Dec 31, 2023