LGI Homes (LGIH)
Total asset turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 2,202,600 | 2,358,580 | 2,304,460 | 3,050,150 | 2,367,930 |
| Total assets | US$ in thousands | 3,758,530 | 3,407,850 | 3,124,830 | 2,351,860 | 1,826,090 |
| Total asset turnover | 0.59 | 0.69 | 0.74 | 1.30 | 1.30 |
December 31, 2024 calculation
Total asset turnover = Revenue ÷ Total assets
= $2,202,600K ÷ $3,758,530K
= 0.59
The total asset turnover ratio measures a company's ability to generate sales from its assets. For LGI Homes, the total asset turnover ratio has remained relatively stable, at 1.30 for both December 31, 2020 and December 31, 2021. This indicates that the company is able to generate $1.30 in sales for every $1 of assets it owns during those years.
However, in the following years, the total asset turnover ratio decreased significantly. By December 31, 2022, the ratio dropped to 0.74, and further decreased to 0.69 by December 31, 2023, and 0.59 by December 31, 2024. This suggests that LGI Homes' efficiency in utilizing its assets to generate sales declined over these years.
A declining total asset turnover ratio could indicate that the company is not efficiently utilizing its assets to generate revenue, which may raise concerns about its operational efficiency and profitability. Furthermore, it may be a signal that the company needs to assess and potentially improve its asset management strategies to enhance overall performance.
Peer comparison
Dec 31, 2024