Lennar Corporation (LEN)

Short-term

Turnover ratios

The activity ratios of Lennar Corp. provide insights into the efficiency of the company's management of its inventory, receivables, payables, and working capital over the past five years.

The inventory turnover ratio has been showing an increasing trend, indicating that Lennar has been more efficient in managing its inventory, with a ratio of 1.50 in 2023 compared to 1.09 in 2019. This suggests that the company is selling its inventory more frequently, which can potentially reduce holding costs and improve cash flow.

The receivables turnover ratio has been declining slightly over the years, indicating that the company took longer to collect its receivables in 2023 compared to previous years. However, the ratio still remains at a relatively high level, indicating that Lennar has been effective in collecting payments from its customers.

Similarly, the payables turnover ratio has also been gradually increasing, which suggests that Lennar has been paying its suppliers more efficiently. A higher payables turnover ratio can indicate effective management of trade credit and could potentially improve the company's liquidity.

The working capital turnover ratio has shown some fluctuations over the years, but overall has remained relatively stable. This implies that Lennar has been effectively utilizing its working capital to generate sales revenue.

Overall, the activity ratios reflect Lennar Corp.'s ability to manage its operating assets and liabilities efficiently, with improvements in inventory turnover and payables turnover potentially contributing to enhanced cash flow and liquidity.

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Average number of days

Lennar Corp.'s activity ratios provide insight into its management of inventory, accounts receivable, and accounts payable. The days of inventory on hand (DOH) decreased from 301.48 days in 2022 to 243.80 days in 2023, indicating more efficient inventory management. This suggests the company is selling inventory at a faster pace and/or managing inventory levels more effectively.

The days of sales outstanding (DSO) increased slightly from 17.50 days in 2022 to 18.09 days in 2023, suggesting a longer time to collect receivables. This trend warrants monitoring, as it may indicate potential issues with customer credit or collection processes.

The number of days of payables decreased to 21.05 days in 2023 from 22.29 days in 2022, indicating a slight improvement in the speed of paying suppliers. This trend suggests the company may be managing its payables more efficiently.

Overall, the changes in Lennar Corp.'s activity ratios reflect improved inventory management and a slight change in collection and payment patterns, which may have implications for the company's working capital and cash flow.

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Long-term

The fixed asset turnover ratio for Lennar Corp. is not available for the years provided. However, the total asset turnover ratio indicates the company's ability to generate sales from its total assets. The trend shows a fluctuating pattern over the past five years, with the ratio decreasing from 0.76 in 2019 to 0.75 in 2020, then increasing to 0.82 in 2021, before slightly decreasing to 0.89 in 2022, and further to 0.87 in 2023.

A declining total asset turnover may suggest inefficiency in asset utilization, while an increasing ratio indicates a more effective use of assets to generate sales. Lennar Corp. should further investigate the causes of these fluctuations, and assess its asset management and sales strategies to ensure optimal utilization of its assets.