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.