LGI Homes (LGIH)
Inventory turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,669,310 | 1,816,390 | 1,657,860 | 2,232,120 | 1,764,830 |
| Inventory | US$ in thousands | 3,387,850 | 3,107,650 | 2,898,300 | 2,085,900 | 1,569,490 |
| Inventory turnover | 0.49 | 0.58 | 0.57 | 1.07 | 1.12 |
December 31, 2024 calculation
Inventory turnover = Cost of revenue ÷ Inventory
= $1,669,310K ÷ $3,387,850K
= 0.49
Based on the data provided for LGI Homes' inventory turnover, we observe a declining trend over the years. The inventory turnover ratio measures the efficiency with which a company manages its inventory by indicating how many times the inventory is sold and replaced within a given period.
In December 31, 2020, LGI Homes' inventory turnover ratio was 1.12, indicating that the company's inventory turned over approximately 1.12 times during that year. However, this ratio decreased to 1.07 by December 31, 2021, showing a slight reduction in the efficiency of inventory management.
Subsequently, there was a more significant decline in inventory turnover, as reflected in the ratios for December 31, 2022 (0.57), December 31, 2023 (0.58), and December 31, 2024 (0.49). These decreasing ratios suggest that LGI Homes may be experiencing challenges in effectively managing and selling its inventory within the given periods.
A declining inventory turnover ratio can indicate potential issues such as overstocking, slow-moving inventory, or difficulties in forecasting demand accurately. It may also point to inefficiencies in production, distribution, or sales processes within the company. LGI Homes should closely monitor and address these factors to enhance its inventory management practices and optimize its operational efficiency.
Peer comparison
Dec 31, 2024