LGI Homes (LGIH)

Short-term

Turnover ratios

LGI Homes Inc's activity ratios provide insights into the efficiency of the company's operations.

1. Inventory turnover: The company's inventory turnover has been relatively consistent around 0.58-0.65 over the past few quarters, indicating that LGI Homes is managing its inventory efficiently. A lower turnover ratio may suggest slow-moving inventory.

2. Receivables turnover: LGI Homes Inc has shown varying receivables turnover ratios, with a range of 45.01 to 102.69. A higher receivables turnover ratio indicates that the company is collecting its receivables quickly, which is a positive sign for cash flow management.

3. Payables turnover: The payables turnover ratio has also fluctuated, ranging from 25.83 to 95.78. A higher payables turnover ratio suggests that the company is paying its suppliers more quickly. However, a very high ratio may indicate tight liquidity management.

4. Working capital turnover: LGI Homes Inc's working capital turnover has been decreasing from 1.27 to 0.81 over the quarters. A lower ratio may signify that the company is not efficiently utilizing its working capital to generate sales.

Overall, LGI Homes Inc appears to be effectively managing its inventory and receivables, though there may be room for improvement in optimizing payables and working capital turnover ratios.

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Average number of days

Days of inventory on hand (DOH) measures how many days it takes for a company to sell its inventory. LGI Homes Inc's DOH has been increasing steadily throughout the year, from 405.22 days in Q1 2022 to 624.48 days in Q4 2023. This indicates that the company is holding onto inventory for a longer period, which may suggest possible inefficiencies in inventory management or slower sales.

Days of sales outstanding (DSO) shows the average number of days it takes for a company to collect on its accounts receivable. LGI Homes Inc's DSO has fluctuated over the year, with a peak of 8.11 days in Q2 2023 and a low of 3.55 days in Q1 2023. The decreasing trend in DSO could indicate the company's ability to collect payments more quickly, which is a positive sign of efficient accounts receivable management.

Number of days of payables represents how long it takes a company to pay its suppliers. LGI Homes Inc's days of payables have also been fluctuating, with a peak of 14.13 days in Q3 2023 and a low of 3.81 days in Q1 2022. A higher number of days of payables may suggest that the company is taking longer to pay its suppliers, which could be strategic for managing cash flow or a sign of potential financial stress.

Overall, LGI Homes Inc's activity ratios indicate mixed performance in inventory management, accounts receivable efficiency, and accounts payable management throughout the year, suggesting opportunities for further improvement in optimizing working capital and operational efficiency.

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Long-term

LGI Homes Inc's fixed asset turnover ratio has been declining steadily over the past eight quarters, from 148.83 in Q1 2022 to 51.81 in Q4 2023. This indicates that the company is generating less revenue relative to its fixed assets.

On the other hand, the total asset turnover ratio has also been decreasing over the same period, from 1.11 in Q1 2022 to 0.69 in Q4 2023. This suggests that LGI Homes Inc is becoming less efficient in generating sales from its total assets.

Overall, the decreasing trend in both the fixed asset turnover and total asset turnover ratios may indicate potential inefficiencies in the company's asset utilization and could be a cause for concern for stakeholders. It may be important for LGI Homes Inc to closely monitor and improve its long-term asset utilization to enhance overall operational efficiency.