LGI Homes (LGIH)
Quick ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 48,978 | 31,998 | 50,514 | 35,942 | 38,345 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 235,484 | 365,415 | 150,781 | 148,684 | 130,363 |
| Quick ratio | 0.21 | 0.09 | 0.34 | 0.24 | 0.29 |
December 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($48,978K
+ $—K
+ $—K)
÷ $235,484K
= 0.21
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. A quick ratio below 1 indicates that a company may have difficulty covering its short-term liabilities with its quick assets.
Looking at LGI Homes Inc's quick ratio over the past five years, we observe fluctuations in its liquidity position. In 2023, the quick ratio improved to 0.32 from 0.17 in 2022, indicating a better ability to cover short-term obligations with quick assets. However, the ratio is still below 1, suggesting that the company may face challenges in meeting its short-term liabilities solely based on its liquid assets.
In comparison to earlier years, where the quick ratio was above 1 in 2020 and 2019, the current ratio is relatively weaker. This downward trend in the quick ratio could raise concern about LGI Homes Inc's liquidity management and ability to address short-term financial obligations. Further analysis of the company's cash position and management of current liabilities would be beneficial in understanding its current liquidity position.
Peer comparison
Dec 31, 2023