DR Horton Inc (DHI)

Short-term

Turnover ratios

Based on the activity ratios provided for DR Horton Inc from 2020 to 2024, here is the analysis:

1. Inventory Turnover:
- The inventory turnover ratio measures how effectively a company manages its inventory. A higher ratio indicates efficient inventory management.
- Over the five-year period, DR Horton Inc's inventory turnover has generally decreased from 1.26 in 2020 to 1.09 in 2024. This suggests a decline in the efficiency of turning over its inventory.
- The decreasing trend may indicate issues such as slower sales, excess inventory on hand, or changing demand patterns in the housing market.

2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects outstanding receivables from its customers. However, the data for this ratio is not provided, which makes it impossible to evaluate DR Horton Inc's effectiveness in collecting receivables.

3. Payables Turnover:
- The payables turnover ratio evaluates how quickly a company pays its suppliers. Unfortunately, the data for this ratio is missing, which limits our ability to assess DR Horton Inc's payables turnover performance.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue. A higher ratio indicates better utilization of working capital.
- DR Horton Inc's working capital turnover has fluctuated over the years but has shown an overall increasing trend, from 4.51 in 2020 to 5.30 in 2024. This suggests improved efficiency in utilizing its working capital to generate sales.

In summary, the analysis of DR Horton Inc's activity ratios indicates a decline in inventory turnover efficiency over the years, an inability to assess receivables and payables turnover due to missing data, and an overall improvement in working capital turnover efficiency.

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Average number of days

Based on the activity ratios provided for DR Horton Inc, we can see a trend in the Days of Inventory on Hand (DOH) metric over the past five years. The DOH has been increasing steadily from 290.55 days in 2020 to 333.37 days in 2024. This indicates that the company is taking longer to sell its inventory, potentially tying up more capital in inventory holding costs.

Unfortunately, the Days of Sales Outstanding (DSO) and the Number of Days of Payables data are not available for analysis. These metrics would have provided additional insights into the efficiency of DR Horton Inc's sales and payment collection processes, as well as its relationship with suppliers.

Overall, the increasing trend in Days of Inventory on Hand suggests that DR Horton Inc may need to focus on improving inventory management and sales strategies to reduce the time it takes to turn inventory into sales, thereby improving working capital efficiency and profitability.

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Long-term

The fixed asset turnover ratio for DR Horton Inc has been fluctuating over the past five years, with values of 69.31 in 2024, 79.61 in 2023, 70.99 in 2022, 70.69 in 2021, and 29.71 in 2020. This ratio indicates the efficiency of the company in generating sales revenue relative to its investment in fixed assets.

The trend suggests that the company's utilization of fixed assets to generate revenue has been inconsistent, with a notable decrease in 2020 followed by an increase in subsequent years, indicating improved efficiency in recent years.

On the other hand, the total asset turnover ratio for DR Horton Inc has also displayed variability over the same period, with values of 1.02 in 2024, 1.09 in 2023, 1.10 in 2022, 1.16 in 2021, and 1.07 in 2020. This ratio measures the company's ability to generate sales revenue in relation to its total assets.

The declining trend in total asset turnover ratios over the years indicates a decrease in the company's overall efficiency in utilizing its assets to generate sales revenue. However, it is important to consider industry benchmarks and the company's specific circumstances when evaluating the significance of these ratios.