LGI Homes (LGIH)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 740.76 | 624.48 | 638.10 | 341.09 | 324.60 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 740.76 | 624.48 | 638.10 | 341.09 | 324.60 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 740.76 + — – —
= 740.76
The cash conversion cycle of LGI Homes has shown fluctuations over the years, ranging from 324.60 days at the end of December 31, 2020, to 740.76 days by the end of December 31, 2024. The trend indicates that the company's ability to convert its investments in inventory and accounts receivable into cash has deteriorated over time. A rising cash conversion cycle suggests that LGI Homes is taking longer to sell its inventory and collect payments from customers, which can potentially strain its liquidity and working capital management. Further analysis of the reasons behind this trend and potential strategies to improve the cash conversion cycle would be beneficial for the company's financial health and efficiency.
Peer comparison
Dec 31, 2024