LGI Homes (LGIH)

Short-term

Turnover ratios

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

1. Inventory Turnover: This ratio indicates how many times inventory is sold and replaced over a period. LGI Homes experienced a fluctuating trend in inventory turnover from March 31, 2020, showing a slight increase to December 31, 2021, before declining steadily. The decrease in inventory turnover from March 31, 2024, to December 31, 2024, may suggest potential issues with managing inventory levels efficiently.

2. Receivables Turnover: Unfortunately, data for receivables turnover is unavailable for LGI Homes from March 31, 2020, to December 31, 2024. It would have provided information on how quickly the company collects payments from its customers.

3. Payables Turnover: Similar to receivables turnover, data for payables turnover is not provided, so we lack insight into LGI Homes' efficiency in paying its suppliers and managing its payables.

4. Working Capital Turnover: This ratio indicates how efficiently working capital is being used to generate revenue. LGI Homes experienced a decreasing trend in working capital turnover from March 31, 2020, to December 31, 2024. The decline from 1.64 on March 31, 2021, to 0.75 on December 31, 2024, suggests a potential decline in the efficiency of using working capital to generate sales.

Overall, LGI Homes' activity ratios reveal mixed efficiency levels in managing inventory turnover and working capital utilization, but the lack of data on receivables and payables turnover limits a comprehensive analysis of the company's overall operational efficiency.

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Average number of days

Based on the provided data, the Days of Inventory on Hand (DOH) for LGI Homes has shown fluctuations over the quarters, ranging from a low of 297.73 days on June 30, 2021, to a high of 740.76 days on December 31, 2024. These fluctuations suggest a varying efficiency in managing inventory levels, with the most recent quarters indicating a significant increase in the time it takes to turn inventory.

Unfortunately, data for the Days of Sales Outstanding (DSO) and Number of Days of Payables for LGI Homes are not available, making it difficult to assess the company's collection and payment practices. The lack of information on these key metrics limits a comprehensive evaluation of LGI Homes' activity ratios from a holistic perspective.

In conclusion, based on the DOH data alone, it appears that LGI Homes may be facing challenges in optimizing its inventory management process, which could potentially impact its overall operational efficiency and financial performance in the future.

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Long-term

The fixed asset turnover ratio for LGI Homes has been on a declining trend, indicating a decrease in the company's ability to generate sales from its fixed assets efficiently over time. The ratio peaked at 1,079.46 on June 30, 2020 but has since been decreasing significantly, reaching a low of 57.37 on June 30, 2023. This trend suggests that LGI Homes may need to re-evaluate its utilization of fixed assets to improve efficiency and profitability in the long term.

On the other hand, the total asset turnover ratio for LGI Homes has shown fluctuations over the years. The ratio peaked at 1.46 on September 30, 2021 but has been declining since then, reaching 0.67 as of December 31, 2024. This trend indicates a decrease in the company's ability to generate sales in relation to its total assets. LGI Homes may need to address this decline by implementing strategies to improve sales efficiency and asset utilization.

In summary, while the fixed asset turnover ratio shows a clear downward trend, the total asset turnover ratio exhibits fluctuations but generally points towards a declining efficiency in generating sales from the company's assets. LGI Homes may need to consider optimizing its asset utilization and sales generation strategies to enhance its long-term financial performance and operational efficiency.