M/I Homes Inc (MHO)

M/I Homes Inc has exhibited consistently strong liquidity ratios over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has shown a positive trend, increasing from 12.99 in 2020 to 21.14 in 2024. This suggests that the company has a substantial buffer to meet its short-term liabilities.

Similarly, the quick ratio, also known as the acid-test ratio, reflects the company's ability to pay off its current liabilities without relying on the sale of inventory. M/I Homes Inc's quick ratio has also improved from 1.41 in 2020 to 4.14 in 2024, indicating a strong ability to meet immediate obligations using its most liquid assets.

Moreover, the cash ratio, representing the company's ability to settle current liabilities with its available cash and cash equivalents, has shown a consistent upward trajectory, reaching 4.14 in 2024. This indicates that M/I Homes Inc holds a sufficient amount of cash to cover its short-term obligations, ensuring financial stability and flexibility.

Overall, the liquidity ratios of M/I Homes Inc reflect a sound financial position, with ample liquidity to meet its obligations and capitalize on potential opportunities.

---

Additional liquidity measure

The cash conversion cycle for M/I Homes Inc has shown a general increasing trend over the past five years, rising from 295.20 days as of December 31, 2020, to 341.38 days by December 31, 2024. This indicates that the company is taking longer to convert its investments in inventory and accounts receivable into cash.

A longer cash conversion cycle means that M/I Homes Inc is tying up more capital in its operations, potentially leading to liquidity challenges. It may also signal inefficiencies in inventory management and collection processes. Management should focus on streamlining operations to shorten the cash conversion cycle and improve cash flow efficiency.