LGI Homes (LGIH)

Current ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total current assets	US$ in thousands	3,469,770	3,197,940	2,955,440	2,194,330	1,721,370
Total current liabilities	US$ in thousands	137,926	235,484	365,415	150,781	148,684
Current ratio		25.16	13.58	8.09	14.55	11.58

December 31, 2024 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $3,469,770K ÷ $137,926K
= 25.16

Based on the data provided, LGI Homes' current ratio has exhibited fluctuations over the past five years. The current ratio measures the company's ability to cover its short-term liabilities with its current assets.

In December 2020, LGI Homes had a current ratio of 11.58, indicating a strong ability to meet its short-term obligations. This ratio improved significantly by December 2021, reaching 14.55, suggesting even stronger liquidity and financial health.

However, there was a notable decline in the current ratio by December 2022, where it dropped to 8.09. This decrease could indicate potential challenges in meeting short-term obligations with current assets at that point in time.

The trend reversed in December 2023, with the current ratio improving to 13.58, indicating a recovery in the company's liquidity position. Furthermore, by December 2024, LGI Homes' current ratio surged to 25.16, reflecting a substantial increase in its ability to cover short-term liabilities with current assets, potentially indicating improved financial management or increased asset liquidity.

Overall, the current ratio has shown significant variability over the years, but the recent uptrend towards the end of the period suggests an improvement in LGI Homes' ability to meet its short-term obligations with the current assets at its disposal.