LGI Homes (LGIH)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 48,978 | 31,998 | 50,514 | 35,942 | 38,345 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 235,484 | 365,415 | 150,781 | 148,684 | 130,363 |
| Cash ratio | 0.21 | 0.09 | 0.34 | 0.24 | 0.29 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($48,978K
+ $—K)
÷ $235,484K
= 0.21
The cash ratio for LGI Homes Inc has fluctuated over the past five years. In 2023, the cash ratio stood at 0.17, indicating that the company had $0.17 of cash and cash equivalents for every $1 of current liabilities. This represented an improvement compared to 2022 when the ratio was 0.09. However, it was lower than the ratios observed in 2021, 2020, and 2019 which were 0.37, 0.26, and 0.36 respectively.
The cash ratio measures a company's ability to cover its short-term liabilities with its readily available cash and cash equivalents. While an increasing trend in the cash ratio is generally positive as it implies improved liquidity, it is important to note that a very high cash ratio may also indicate that the company is not efficiently deploying its excess cash. Therefore, LGI Homes Inc should continue to monitor its cash ratio and strive to maintain a balance between liquidity and efficient use of cash resources.
Peer comparison
Dec 31, 2023