Taylor Morn Home (TMHC)

Short-term

Turnover ratios

The analysis of Taylor Morrison Home Corp.'s activity ratios reveals the following trends:

1. Inventory Turnover: The company's inventory turnover has been relatively stable over the past five years, ranging between 0.95 to 1.14 times. This indicates that Taylor Morrison is able to sell through its inventory at a consistent pace, with a slight decrease in 2023 compared to the previous year.

2. Receivables Turnover: The receivables turnover has shown a decreasing trend over the years, from 67.60 times in 2019 to 40.20 times in 2023. This suggests that the company is taking longer to collect payments from customers, which may impact its cash flow and working capital management.

3. Payables Turnover: Taylor Morrison's payables turnover has remained relatively stable around 22 times, indicating that the company is efficient in paying its suppliers. Consistent payables turnover ratio may suggest a good relationship with suppliers and effective management of accounts payable.

4. Working Capital Turnover: The working capital turnover ratio measures the efficiency of a company in using its working capital to generate sales. Taylor Morrison's working capital turnover has fluctuated over the years but has generally been above 1, indicating that the company is effectively utilizing its working capital to support its operations and generate revenue.

Overall, while the inventory turnover and payables turnover ratios suggest efficient management of inventory and payables, the decreasing trend in receivables turnover raises some concerns about the company's ability to collect payments in a timely manner. The working capital turnover ratio indicates that Taylor Morrison is using its working capital effectively to support its sales activities. Further analysis and comparison with industry benchmarks may provide additional insights into the company's operational efficiency.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its assets and operations. Let's analyze the activity ratios of Taylor Morrison Home Corp. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The trend in DOH for Taylor Morrison Home Corp. shows fluctuations over the past five years, ranging from a low of 319.67 days in 2022 to a high of 382.75 days in 2020. A higher DOH indicates that the company is holding inventory for a longer period before selling it.
- The increase in DOH from 2022 to 2023 suggests a potentially slower turnover of inventory, which could tie up more capital in the form of unsold inventory.

2. Days of Sales Outstanding (DSO):
- The DSO for Taylor Morrison Home Corp. has generally decreased over the years, indicating that the company is collecting sales revenue more efficiently from its customers. A lower DSO reflects a shorter period in which customers take to pay their bills.
- The decrease in DSO from 2019 to 2023 indicates improved receivables management and potentially more stringent credit policies being implemented by the company.

3. Number of Days of Payables:
- The days of payables for Taylor Morrison Home Corp. have remained relatively consistent over the past five years, with a slight increase from 15.25 days in 2019 to 17.07 days in 2023. This suggests that the company is taking a consistent amount of time to pay its suppliers.
- The stability in the number of days of payables may indicate a balanced approach to managing supplier relationships and cash flow.

In conclusion, while Taylor Morrison Home Corp. has shown improvements in managing its receivables, there are potential challenges in optimizing its inventory turnover. The company's stable approach to managing payables indicates a consistent stance on vendor payments.

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Long-term

The fixed asset turnover ratio for Taylor Morrison Home Corp. has been experiencing a decreasing trend over the past five years, indicating that the company's efficiency in generating revenue from its fixed assets has declined. In particular, the ratio decreased from 55.46 in 2019 to 25.13 in 2023. This suggests that the company may not be utilizing its fixed assets as effectively as before to generate sales.

On the other hand, the total asset turnover ratio has been fluctuating within a relatively narrow range over the same period. Despite some variability, the ratio has generally remained below 1, suggesting that Taylor Morrison Home Corp. is generating less than one dollar of sales for each dollar of total assets it possesses.

Overall, the long-term activity ratios for Taylor Morrison Home Corp. indicate that the company may need to focus on improving its efficiency in generating sales from both its fixed assets and total assets to enhance profitability and optimize its asset utilization.