Meritage Corporation (MTH)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 2,794.65 | 3,080.19 | 2,906.61 | 2,149.09 | 2,549.99 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 2,794.65 | 3,080.19 | 2,906.61 | 2,149.09 | 2,549.99 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 2,794.65 + — – —
= 2,794.65
The cash conversion cycle of Meritage Homes Corp. has shown a consistent improvement over the past five years. The company has managed to significantly reduce its cash conversion cycle from -10.20 days in 2019 to -5.58 days in 2023. This indicates that Meritage Homes Corp. has been able to more efficiently convert its investments in raw materials and other resources into cash.
A negative cash conversion cycle reflects that the company is able to collect cash from its customers before it needs to pay its suppliers. This can be seen as a positive sign of operational efficiency.
Overall, the trend of the decreasing cash conversion cycle over the years suggests that Meritage Homes Corp. has been managing its working capital effectively, which can help improve its liquidity position and potentially enhance its overall financial performance.
Peer comparison
Dec 31, 2023