Meritage Corporation (MTH)

Short-term

Turnover ratios

Based on the provided data for Meritage Corporation, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company manages its inventory. A higher ratio indicates that inventory is selling quickly.
- The trend for Meritage Corporation shows a slight decrease in inventory turnover from 1.27 in 2020 to 0.84 in 2024. This may suggest that inventory is taking longer to sell over the years.

2. Receivables Turnover:
- Receivables turnover ratio measures the efficiency of the company in collecting its receivables. A higher ratio implies prompt collection of receivables.
- The data shows "—," indicating that information on receivables turnover is not available. This could be due to different accounting practices or the nature of Meritage's operations.

3. Payables Turnover:
- Payables turnover ratio reflects how quickly a company pays its suppliers. A higher ratio could imply that the company is paying its bills quickly.
- Similar to receivables turnover, there is no data available for payables turnover, indicated by "—".

4. Working Capital Turnover:
- Working capital turnover ratio measures how efficiently the company utilizes its working capital to generate sales.
- Meritage Corporation's working capital turnover ratio shows a significant increase from 1.41 in 2020 to 9.15 in 2024. This suggests a substantial increase in sales relative to working capital, indicating potentially more efficient utilization of resources for generating revenue.

In conclusion, while the inventory turnover has shown a slight decline over the years, the significant increase in working capital turnover reflects a positive trend in the efficiency of utilizing resources to drive sales. However, the lack of data for receivables and payables turnover limits a comprehensive analysis of the company's overall activity ratios.

---

Average number of days

Based on the provided data, we can analyze Meritage Corporation's activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- December 31, 2020: 287.22 days
- December 31, 2021: 367.20 days
- December 31, 2022: 353.88 days
- December 31, 2023: 373.74 days
- December 31, 2024: 437.08 days

The DOH measures the average number of days that inventory is held before being sold. A higher number of days indicates that Meritage Corporation may be carrying excess inventory, which could tie up capital and increase storage costs. The increasing trend in DOH from 2020 to 2024 suggests a potential issue with inventory management that may need to be addressed to improve efficiency.

2. Days of Sales Outstanding (DSO):
- December 31, 2020: Not available
- December 31, 2021: Not available
- December 31, 2022: Not available
- December 31, 2023: Not available
- December 31, 2024: Not available

The DSO ratio shows the average number of days it takes for Meritage Corporation to collect its accounts receivable. Unfortunately, the data for DSO is not provided, making it difficult to assess the efficiency of the company in collecting payments from customers. A lower DSO is generally favorable as it indicates faster cash collection.

3. Number of Days of Payables:
- December 31, 2020: Not available
- December 31, 2021: Not available
- December 31, 2022: Not available
- December 31, 2023: Not available
- December 31, 2024: Not available

The number of days of payables represents the average number of days it takes for Meritage Corporation to pay its suppliers or vendors. Similarly, lacking data for this ratio makes it challenging to evaluate the company's payment practices and liquidity management. A longer payment period can indicate favorable working capital management, but it could also signal strained relationships with suppliers if extended too far.

In conclusion, while analysis of the Days of Inventory on Hand ratio highlights potential concerns with inventory management, the absence of data for Days of Sales Outstanding and Number of Days of Payables restricts a comprehensive assessment of Meritage Corporation's overall activity ratios and operational efficiency. Further information on these ratios would be beneficial for a more thorough analysis of the company's financial performance.

---

Long-term

Meritage Corporation's fixed asset turnover ratio, which measures how efficiently the company is utilizing its fixed assets to generate revenue, has shown a positive trend over the years. The ratio has increased from 115.74 in 2020 to 163.02 in 2022, indicating that the company has been able to generate more revenue from its fixed assets over time.

In contrast, the total asset turnover ratio, which reflects the company's overall efficiency in generating sales from all its assets, has shown a mixed performance. The ratio decreased slightly from 1.17 in 2020 to 1.07 in 2021 but improved to 1.09 in 2022. However, there was a notable decline in 2023 to 0.96 and a further decrease to 0.89 in 2024, suggesting a potential decrease in the company's ability to generate sales from its total assets.

Overall, while the fixed asset turnover ratio indicates improved efficiency in utilizing fixed assets, the total asset turnover ratio shows a relatively inconsistent performance in efficiently generating sales from all assets. It would be important for Meritage Corporation to further analyze the reasons behind the fluctuations in the total asset turnover ratio to identify areas for improvement in asset utilization and revenue generation.