LGI Homes (LGIH)

Days of inventory on hand (DOH)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover		0.49	0.58	0.57	1.07	1.12
DOH	days	740.76	624.48	638.10	341.09	324.60

December 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.49
= 740.76

Based on the provided data, LGI Homes has shown an increasing trend in its Days of Inventory on Hand (DOH) over the years.

On December 31, 2020, the company had 324.60 days of inventory on hand, which increased to 341.09 days by the end of 2021. This indicates that the company took longer to sell its inventory in 2021 compared to 2020.

By the end of 2022, the DOH further increased significantly to 638.10 days, suggesting that LGI Homes had a substantial amount of inventory on hand relative to its sales during that period. This extended DOH could potentially indicate inefficiencies in managing inventory or challenges in selling homes.

In 2023, the DOH slightly decreased to 624.48 days, but still remained at a high level, reflecting continued pressure on inventory turnover.

Finally, as of December 31, 2024, the DOH reached 740.76 days, the highest level in the given period. This prolonged DOH could imply potential risks related to excess inventory levels, carrying costs, and potential obsolescence.

In conclusion, the continuous increase in LGI Homes' Days of Inventory on Hand over the years signals a need for the company to evaluate and improve its inventory management strategies to enhance efficiency and optimize its working capital.