Taylor Morn Home (TMHC)

Short-term

Turnover ratios

The activity ratios of Taylor Morrison Home Corp. provide insights into how efficiently the company is managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. Taylor Morrison's inventory turnover has been relatively stable around 1.10 over the past eight quarters, indicating that the company is effectively managing its inventory levels.

2. Receivables Turnover: The receivables turnover ratio indicates how many times a company collects its accounts receivable during a period. Taylor Morrison has shown consistent improvement in this ratio, with a gradual increase from around 38 in Q3 2022 to approximately 42 in Q4 2023. This suggests that the company is collecting its outstanding receivables more quickly.

3. Payables Turnover: The payables turnover ratio reflects how efficiently a company is managing its trade payables. Taylor Morrison's payables turnover ratio has fluctuated between 21 and 27 over the past eight quarters. A decreasing trend in this ratio may indicate that the company is taking longer to pay its suppliers, which could potentially strain vendor relationships if not managed effectively.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively a company is using its working capital to generate sales. Taylor Morrison's working capital turnover ratio has ranged between 1.30 and 1.50 over the past two years, showing consistent performance in utilizing its working capital efficiently to support its operations and revenue generation.

Overall, Taylor Morrison Home Corp. appears to be effectively managing its inventory, receivables, payables, and working capital based on the trend analysis of its activity ratios.

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Average number of days

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

1. Days of Inventory on Hand (DOH):
- Taylor Morrison's DOH has fluctuated over the past eight quarters, ranging from a low of 308.50 days in Q2 2023 to a high of 359.21 days in Q4 2023.
- A high DOH value indicates that the company holds inventory for an extended period before selling it, which may tie up capital and increase carrying costs.
- The decreasing trend in DOH from Q4 2022 to Q2 2023 is a positive sign, suggesting better inventory management.

2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for Taylor Morrison to collect revenue after making a sale.
- The DSO values have varied between 7.30 days in Q1 2022 to 9.49 days in Q3 2022, indicating some inconsistency in the company's collection efficiency.
- Generally, a lower DSO is favorable as it implies faster cash conversion from sales.

3. Number of Days of Payables:
- This ratio shows the average time it takes for Taylor Morrison to pay its suppliers.
- The number of days of payables has ranged from a low of 13.44 days in Q1 2022 to a high of 17.20 days in Q2 2022.
- A longer payment period could indicate better cash flow management but may also strain supplier relationships if not managed properly.

Overall, Taylor Morrison's activity ratios demonstrate fluctuations in inventory management, collection efficiency, and payment practices. Investors and stakeholders should monitor these ratios to assess the company's operational performance and potential liquidity risks.

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Long-term

The fixed asset turnover ratio for Taylor Morrison Home Corp. has ranged from 25.13 in Q4 2023 to 40.64 in Q4 2022. This ratio indicates how efficiently the company generates sales from its fixed assets. A higher fixed asset turnover ratio suggests that the company is using its fixed assets more efficiently to generate revenue.

On the other hand, the total asset turnover ratio for Taylor Morrison Home Corp. has fluctuated between 0.86 in Q4 2023 to 0.98 in Q1 2023. This ratio measures how effectively the company utilizes its total assets to generate revenue. A higher total asset turnover ratio indicates that the company is generating more sales relative to its total assets.

Overall, the trend in both the fixed asset turnover and total asset turnover ratios for Taylor Morrison Home Corp. shows fluctuations over the quarters, with some periods of improvement and others of decline. Further analysis and comparison with industry benchmarks would be needed to understand the company's performance in utilizing its assets effectively in the long term.