Lennar Corporation (LEN)

Lennar Corporation's liquidity ratios show a generally positive trend over the period under consideration. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has steadily increased from 1.88 as of February 29, 2020, to a peak of 17.62 as of February 28, 2023, before declining to 12.64 as of February 29, 2024. This indicates that Lennar has significantly improved its liquidity position over the years, although there was a slight decrease in the most recent period.

In terms of the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, Lennar also shows a positive trend from 0.94 on February 29, 2020, to a peak of 4.05 on November 30, 2023. The quick ratio remained above 1 throughout the period, indicating that the company has an adequate level of liquid assets to cover its short-term liabilities.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, also demonstrates a similar positive trend over the years. The ratio increased from 0.94 on February 29, 2020, to 4.05 on November 30, 2023, before declining to 0.93 as of November 30, 2024. This suggests that Lennar has a substantial amount of cash on hand to cover its immediate financial obligations.

Overall, the liquidity ratios for Lennar Corporation show that the company has maintained a strong liquidity position, with the ability to meet its short-term obligations comfortably throughout the period. However, the slight decrease in ratios in the most recent period may warrant further monitoring to ensure continued liquidity strength.

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Additional liquidity measure

The cash conversion cycle for Lennar Corporation has exhibited significant fluctuations over the period from February 29, 2020, to November 30, 2024.

- The company started with a cash conversion cycle of 374.11 days on February 29, 2020, indicating it took approximately 374 days to convert its investments in inventory and accounts receivable into cash.
- The cycle improved slightly over the next few quarters, reaching 348.22 days by November 30, 2020.
- However, from February 28, 2021, to August 31, 2021, there was a substantial increase in the cash conversion cycle to 1,257.00 days, indicating a significant slowdown in converting investments into cash.
- This trend continued with extreme fluctuations, with the cycle reaching as high as 16,447.68 days on May 31, 2022, before dropping to 11,954.73 days by May 31, 2023.
- Notably, there were periods where the cash conversion cycle reached 0.00 days, suggesting that at those points, the company was able to convert investments into cash almost immediately.
- The cycle peaked again on February 29, 2024, at 20,366.19 days before decreasing to 17,115.62 days on August 31, 2024.

Overall, the cash conversion cycle of Lennar Corporation has shown significant volatility, indicating potential challenges in efficiently managing cash inflows and outflows, as well as the conversion of investments into cash. It would be advisable for the company to focus on optimizing its working capital management processes to stabilize and improve its cash conversion cycle in the future.