TRI Pointe Homes Inc (TPH)

Tri Pointe Homes Inc.'s liquidity ratios have shown a generally positive trend over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been consistently above 1, indicating that the company has more than enough current assets to meet its short-term liabilities. The ratio improved from 1.36 in 2019 to 2.60 in 2023, suggesting an increasing liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Tri Pointe Homes Inc. has maintained a strong quick ratio above 1 over the five-year period, indicating a healthy ability to cover its short-term liabilities using its most liquid assets. The ratio remained stable at 2.60 from 2019 to 2023, suggesting consistent liquidity management.

The cash ratio, which assesses the company's ability to cover its current liabilities with cash and cash equivalents, has also been on an upward trend from 1.15 in 2019 to 2.07 in 2023. This indicates that Tri Pointe Homes Inc. has been building up its cash reserves relative to its current liabilities, strengthening its liquidity position and ability to meet short-term obligations with cash on hand.

Overall, Tri Pointe Homes Inc. has demonstrated strong liquidity ratios, with an increasing trend over the past five years. This suggests that the company has ample liquidity to meet its short-term financial obligations and indicates effective liquidity management.

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Additional liquidity measure

The cash conversion cycle of Tri Pointe Homes Inc. has shown variability over the past five years. In 2023, the company's cash conversion cycle increased significantly to 13.77 days compared to the previous year, indicating a longer period for the company to convert its investments in inventory and accounts receivable into cash. This increase may suggest potential challenges in efficiently managing working capital and liquidity.

Looking back at 2022, Tri Pointe Homes had a relatively shorter cash conversion cycle of 7.03 days, indicating a quicker ability to convert its resources into cash. This improvement from the previous year suggests effective management of inventory and receivables, leading to enhanced cash flow generation.

In 2021, the company's cash conversion cycle was significantly positive at 0.34 days, indicating a swift conversion of investments into cash. This efficient performance may reflect well on the company's working capital management and operational efficiency.

In 2020, Tri Pointe Homes managed to achieve a negative cash conversion cycle of -4.39 days, implying that the company was able to collect cash from customers before paying off its suppliers and converting inventory into sales. This negative cycle can be seen as an advantageous position for the company in terms of liquidity and cash flow management.

In 2019, the company also reported a negative cash conversion cycle of -1.57 days, further indicating its ability to efficiently manage working capital and convert investments into cash. Overall, the trend in Tri Pointe Homes Inc.'s cash conversion cycle signifies fluctuations in their operational efficiency and working capital management over the past five years.