LGI Homes (LGIH)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 53,197 48,978 31,998 50,514 35,942
Short-term investments US$ in thousands
Total current liabilities US$ in thousands 137,926 235,484 365,415 150,781 148,684
Cash ratio 0.39 0.21 0.09 0.34 0.24

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($53,197K + $—K) ÷ $137,926K
= 0.39

The cash ratio for LGI Homes has shown fluctuations over the years as per the provided data. The ratio was 0.24 as of December 31, 2020, indicating that for every dollar of current liabilities, the company had $0.24 in cash or cash equivalents. It increased to 0.34 by December 31, 2021, indicating a better ability to cover short-term obligations with cash on hand.

However, there was a significant decline in the cash ratio to 0.09 by December 31, 2022, possibly pointing towards a potential liquidity strain or less available cash to cover immediate liabilities. The ratio slightly improved to 0.21 by December 31, 2023, but remained relatively low compared to previous years.

By December 31, 2024, LGI Homes experienced a notable recovery in its cash ratio, which stood at 0.39. This suggests a stronger liquidity position, with the company having $0.39 in cash for every dollar of current liabilities, indicating an improved ability to meet short-term financial obligations with readily available cash resources.

Overall, LGI Homes' cash ratio trend reflects fluctuations in its liquidity position over the years, with variations in its ability to cover short-term liabilities with cash reserves. It is essential for the company to maintain a steady cash ratio to ensure financial stability and meet its near-term obligations effectively.