M/I Homes Inc (MHO)

The liquidity ratios of M/I Homes Inc provide insight into the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio measures the company's ability to pay off its short-term liabilities with its current assets. M/I Homes Inc's current ratio has fluctuated over the years, ranging from a high of 16.44 on March 31, 2023, to a low of 6.71 on June 30, 2024. Generally, a current ratio above 1 is considered healthy, indicating the company has enough current assets to cover its current liabilities. M/I Homes Inc's current ratio has mostly remained above 1, with some periods of decline.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. M/I Homes Inc's quick ratio values have also varied, with levels above 1 seen as favorable. The company's quick ratio reached a high of 4.14 on December 31, 2024, indicating a strong ability to meet short-term obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity measure, focusing only on the company's cash and cash equivalents to cover current liabilities. M/I Homes Inc's cash ratio has generally been lower compared to the current and quick ratios, reflecting a lower level of cash reserves relative to overall current liabilities. However, the company's cash ratio improved over time, reaching a high of 4.14 on December 31, 2024, suggesting a strengthening cash position.

Overall, while M/I Homes Inc's liquidity ratios have shown fluctuations, the company has maintained levels that indicate a sufficient ability to meet short-term obligations with its current assets, with improvements in the cash position observed over the years.

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Additional liquidity measure

The cash conversion cycle of M/I Homes Inc has shown fluctuating trends over the past few years. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to June 30, 2021, the company managed to reduce its cash conversion cycle gradually, indicating an improvement in managing inventory, accounts receivable, and accounts payable more efficiently. This led to a decrease in the number of days it takes to convert resources into cash.

However, from September 30, 2021, to September 30, 2022, there was a significant increase in the cash conversion cycle. This suggests that the company may have experienced challenges in managing its working capital effectively during this period, resulting in a longer time to convert investments into cash flows.

The cycle improved slightly by December 31, 2022, but remained relatively high compared to previous years. Subsequently, from March 31, 2023, to December 31, 2024, the cash conversion cycle fluctuated without a clear trend, indicating potential challenges in maintaining a consistent working capital management strategy.

Overall, the analysis of M/I Homes Inc's cash conversion cycle suggests that the company has experienced periods of both efficient and inefficient working capital management, which can have implications for its liquidity and operational performance.