LGI Homes (LGIH)
Cash conversion cycle
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 525.52 | 546.18 | 537.98 | 540.83 | 547.26 | 509.78 | 446.48 | 393.49 | 341.09 | 303.23 | 297.73 | 304.00 | 324.60 | 359.04 | 345.25 | 353.84 | 390.51 | 428.97 | 412.24 | 414.75 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 525.52 | 546.18 | 537.98 | 540.83 | 547.26 | 509.78 | 446.48 | 393.49 | 341.09 | 303.23 | 297.73 | 304.00 | 324.60 | 359.04 | 345.25 | 353.84 | 390.51 | 428.97 | 412.24 | 414.75 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 525.52 + — – —
= 525.52
The cash conversion cycle of LGI Homes Inc has shown some fluctuation over the past eight quarters. Generally, the company's cash conversion cycle has been on the higher side, indicating that it takes LGI Homes Inc an extended period to convert its investments in inventory and other resources back into cash.
Specifically, in the most recent quarter, Q4 2023, the cash conversion cycle was 624.52 days, showing a slight improvement compared to the preceding quarters. This may suggest that the company was managing its working capital more efficiently during this period.
On the other hand, in Q3 2022, the cash conversion cycle reached its highest point at 636.51 days, signifying prolonged delays in converting investments into cash. However, there was a significant improvement in Q1 2022, with the cash conversion cycle dropping to 407.53 days, indicating a more efficient management of working capital during that quarter.
Overall, LGI Homes Inc should continue monitoring and analyzing its cash conversion cycle to identify areas for improvement in working capital management and strive for a more efficient cash conversion process in order to enhance its financial performance and liquidity position.
Peer comparison
Dec 31, 2023