Meritage Corporation (MTH)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	4,784,030	4,610,900	4,495,260	3,712,000	3,530,300
Inventory	US$ in thousands	5,728,780	4,721,290	4,358,260	3,734,410	2,778,040
Inventory turnover		0.84	0.98	1.03	0.99	1.27

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $4,784,030K ÷ $5,728,780K
= 0.84

Inventory turnover is a crucial financial ratio that indicates how efficiently a company manages its inventory. In the case of Meritage Corporation, the trend in inventory turnover over the past five years has shown a decline.

At the end of December 31, 2020, the inventory turnover was 1.27, indicating that the company was selling its inventory 1.27 times during that year. However, there was a decrease in inventory turnover to 0.99 by December 31, 2021, suggesting a slower rate of inventory turnover.

The trend continued with inventory turnover falling to 1.03 by December 31, 2022, and then decreasing further to 0.98 by December 31, 2023. The most significant drop was seen by the end of December 31, 2024, with inventory turnover declining to 0.84.

A decreasing inventory turnover ratio over time may imply that Meritage Corporation is experiencing challenges in efficiently managing its inventory levels or is facing difficulties in selling its products. This could lead to potential concerns such as overstocking, obsolete inventory, or ineffective sales strategies.

It is important for Meritage Corporation to closely monitor its inventory turnover and implement strategies to improve the efficiency of its inventory management in order to enhance overall operational performance and financial health.