NVR Inc (NVR)

Short-term

Turnover ratios

The activity ratios of NVR Inc. provide insights into how efficiently the company is managing its assets and liabilities to generate sales and operate its business.

1. Inventory Turnover:
- NVR Inc.'s inventory turnover ratio has been fluctuating over the past five years, ranging from 3.47 to 4.34. This ratio indicates that the company is selling and replenishing its inventory approximately 3 to 4 times a year. A higher ratio suggests better inventory management and efficient sales practices.

2. Receivables Turnover:
- NVR Inc.'s receivables turnover ratio has shown a decreasing trend over the years, with a significant drop in 2023 to 333.89 from 507.40 in 2022. This implies that the company is collecting its accounts receivables less frequently compared to previous years. A lower ratio may indicate potential issues with collecting outstanding payments from customers.

3. Payables Turnover:
- The payables turnover ratio of NVR Inc. has been relatively stable, ranging from 17.47 to 22.94. This ratio demonstrates the speed at which the company is paying its suppliers and vendors. A higher ratio indicates that the company is managing its payables efficiently and possibly maximizing trade credit terms.

4. Working Capital Turnover:
- NVR Inc.'s working capital turnover ratio has also shown variability over the years, with a range of 2.36 to 4.73. This ratio measures how effectively the company is using its working capital to generate sales. A higher ratio signifies that NVR Inc. is efficiently utilizing its current assets to drive revenue.

Overall, the activity ratios suggest that NVR Inc. has been managing its inventory effectively, but there may be some concerns regarding the collection of receivables. The stability in payables turnover indicates consistent payment practices, while the working capital turnover reflects fluctuations in the company's operational efficiency over the years.

---

Average number of days

The activity ratios of NVR Inc. provide insights into the efficiency of the company's operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH): The trend in DOH indicates the number of days it takes for NVR Inc. to sell its inventory. From 2019 to 2023, there has been some fluctuation in DOH, with a peak in 2021 at 105.10 days and a subsequent decrease in 2022 and an increase in 2023. A higher number of days of inventory on hand may suggest slower inventory turnover and potentially excess or obsolete inventory. Conversely, a lower number may indicate efficient inventory management.

2. Days of Sales Outstanding (DSO): DSO shows the average number of days it takes for NVR Inc. to collect payment from its customers. The trend in DSO reflects a decrease over the years, indicating that the company has been improving its collection process and receiving payments more quickly. A lower DSO generally indicates a more efficient credit and collection policy.

3. Number of Days of Payables: This ratio reveals the average number of days NVR Inc. takes to pay its suppliers. The trend in days of payables has varied, with fluctuations in payment periods. A longer payable period can be advantageous as it allows the company to hold onto cash longer before paying suppliers, potentially improving cash flow management. However, overly extending this period may strain supplier relationships.

Overall, by analyzing these activity ratios, investors and analysts can assess how effectively NVR Inc. manages its inventory, collections, and payments, which are crucial aspects of the company's operational efficiency and financial health.

---

Long-term

The fixed asset turnover ratio measures the efficiency of NVR Inc. in generating sales from its fixed assets. The ratio shows a declining trend from 2019 to 2023, indicating that the company is generating fewer sales from its fixed assets over the years. However, the ratio remains relatively high, suggesting that NVR Inc. is still efficient in utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets. This ratio also shows a decreasing trend over the years, indicating that NVR Inc. is becoming less efficient in generating sales from its total assets. Despite the decline, the ratio remains above 1 in all years, which suggests that the company is still generating more in sales compared to its total assets.

Overall, while both ratios show a declining trend, NVR Inc. continues to generate revenue efficiently from its fixed assets and total assets, although there is a slight decrease in efficiency over the years. The company may need to investigate the reasons behind the declining turnover ratios and take measures to improve its asset utilization efficiency.