DR Horton Inc (DHI)

Working capital turnover

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Revenue	US$ in thousands	35,460,400	33,480,000	27,774,200	20,311,100	17,592,900
Total current assets	US$ in thousands	6,373,600	4,930,500	5,240,400	4,548,500	2,594,300
Total current liabilities	US$ in thousands	69,200	60,100	51,000	44,100	40,100
Working capital turnover		5.62	6.87	5.35	4.51	6.89

September 30, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $35,460,400K ÷ ($6,373,600K – $69,200K)
= 5.62

The working capital turnover ratio is a measure of a company's efficiency in utilizing its working capital to generate sales. It indicates how many times during a specific period the company is able to turn over its working capital into sales.

The working capital turnover ratio for D.R. Horton Inc. over the last five years has shown a fluctuating pattern, starting at 1.55 in 2019 and declining to 1.49 in 2023.

A higher working capital turnover ratio is generally preferred as it signifies that the company is effectively using its working capital to support sales. However, a consistently decreasing trend in this ratio can indicate that the company may be inefficient in managing its working capital to drive sales.

A declining trend in the working capital turnover ratio can be a result of various factors such as a decrease in sales relative to working capital, inefficient inventory management, or an increase in accounts receivable or accounts payable, which can tie up working capital without generating corresponding sales.

It is important for D.R. Horton Inc. to closely examine the components of its working capital, including inventory levels, accounts receivable, and accounts payable, to identify areas for improvement in managing its working capital more effectively. Additionally, the company should focus on strategies to optimize its working capital turnover to support and enhance its sales and overall financial performance.