LGI Homes (LGIH)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 2,358,580 | 2,304,460 | 3,050,150 | 2,367,930 | 1,838,150 |
| Property, plant and equipment | US$ in thousands | 45,522 | 32,997 | 16,944 | 3,618 | 1,632 |
| Fixed asset turnover | 51.81 | 69.84 | 180.01 | 654.49 | 1,126.32 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $2,358,580K ÷ $45,522K
= 51.81
The fixed asset turnover ratio measures the efficiency of LGI Homes Inc in generating sales revenue from its investment in fixed assets. A higher ratio indicates that the company is utilizing its fixed assets more effectively to generate sales.
Looking at the trend in LGI Homes Inc's fixed asset turnover ratio over the past five years, we observe a significant decline. The ratio has decreased from 1,126.32 in 2019 to 51.81 in 2023. This may suggest that LGI Homes Inc is experiencing challenges in efficiently utilizing its fixed assets to generate sales revenue.
The substantial decrease in the fixed asset turnover ratio could be due to various factors such as an increase in fixed asset investments without a corresponding increase in sales revenue, operational inefficiencies, or changes in the industry landscape.
It is essential for LGI Homes Inc to conduct a detailed analysis of its fixed asset management and operational processes to identify the root causes of the declining fixed asset turnover ratio. By addressing these issues, the company can improve its efficiency in utilizing fixed assets and enhance overall financial performance.
Peer comparison
Dec 31, 2023