TRI Pointe Homes Inc (TPH)

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	21,801.49	2,923.50	2,655.88	419.89	452.47
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	21,801.49	2,923.50	2,655.88	419.89	452.47

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 21,801.49 + — – —
= 21,801.49

Tri Pointe Homes Inc.'s cash conversion cycle has shown varying trends over the past five years. In 2023, the company's cash conversion cycle increased to 13.77 days from 7.03 days in 2022. This indicates that it took the company longer to convert its investments in inventory and accounts receivable into cash during 2023 compared to the previous year.

Looking further back, in 2021, the cash conversion cycle was significantly higher at 0.34 days, indicating a shorter period required to convert investments into cash. In 2020 and 2019, the company's cash conversion cycle was negative, indicating that Tri Pointe Homes Inc. was able to convert its investments into cash relatively quickly during these years.

The increasing trend in the cash conversion cycle from 2021 to 2023 may suggest potential challenges in managing the company's working capital efficiently. This could be due to factors such as slower inventory turnover or longer accounts receivable collection periods, which can impact the company's liquidity and cash flow management.

Overall, a higher cash conversion cycle implies that the company is tying up more cash in its operating cycle, which could potentially indicate inefficiencies in managing working capital. Tri Pointe Homes Inc. may need to focus on optimizing its inventory management and receivables collection processes to improve its cash conversion cycle and enhance its overall financial performance.