LGI Homes (LGIH)

Working capital turnover

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Revenue (ttm)	US$ in thousands	2,358,580	2,238,428	2,167,963	2,245,762	2,304,455	2,617,269	2,821,803	2,890,246	3,050,149	3,146,471	2,929,065	2,619,155	2,367,929	2,076,180	2,025,059	2,005,287	1,838,154	1,657,665	1,554,953	1,512,970
Total current assets	US$ in thousands	48,978	3,139,600	2,980,610	2,945,360	31,998	2,962,010	2,727,780	2,437,380	50,514	46,717	111,704	48,157	35,942	46,335	49,102	118,232	38,345	37,030	37,555	35,084
Total current liabilities	US$ in thousands	235,484	341,970	355,130	380,857	365,415	202,395	131,140	109,052	150,781	89,584	120,545	123,556	148,684	78,989	92,582	71,727	130,363	107,782	95,902	51,794
Working capital turnover		—	0.80	0.83	0.88	—	0.95	1.09	1.24	—	—	—	—	—	—	—	43.12	—	—	—	—

December 31, 2023 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $2,358,580K ÷ ($48,978K – $235,484K)
= —

The working capital turnover for LGI Homes Inc has been consistently fluctuating over the recent quarters. The ratio indicates how efficiently the company is managing its working capital to generate sales revenue. A lower ratio suggests that the company is not efficiently utilizing its working capital to generate sales, while a higher ratio indicates a more efficient use of working capital.

In this case, the working capital turnover has been gradually decreasing from 1.27 in Q1 2022 to 0.81 in Q4 2023. This suggests that LGI Homes Inc may be facing challenges in efficiently converting its working capital into sales revenue. The decreasing trend may indicate potential issues with managing inventory levels, collecting receivables, or controlling operating expenses.

It is important for LGI Homes Inc to closely monitor its working capital turnover and take necessary actions to improve efficiency in managing its working capital. This could involve implementing better inventory management practices, optimizing accounts receivable collection processes, or adjusting operational strategies to enhance overall financial performance.