Taylor Morn Home (TMHC)
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 | 251.65 | 217.27 | 243.15 | 285.23 | 273.61 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 251.65 | 217.27 | 243.15 | 285.23 | 273.61 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 251.65 + — – —
= 251.65
The cash conversion cycle of Taylor Morrison Home Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 351.23 days, indicating that it took the company approximately 351 days to convert its investments in raw materials into cash from the sale of finished goods. This represents an increase from the previous year, where the cycle was 312.11 days.
Comparing the trend over the 5-year period, we can see that the cycle was relatively stable in 2021 and 2019 but increased in 2020 and 2023. A longer cash conversion cycle could suggest inefficiencies in managing inventory, accounts receivables, and accounts payables, potentially leading to increased working capital requirements and lower liquidity.
However, it is essential to analyze the components of the cash conversion cycle individually to identify specific areas that may be contributing to the overall trend. Further investigation into inventory turnover, accounts receivable collection period, and accounts payable payment period could provide insights into the company's operational efficiency and liquidity management.
Peer comparison
Dec 31, 2023