Topbuild Corp (BLD)

Short-term

Turnover ratios

Topbuild Corp's activity ratios provide insights into the efficiency of the company's operations and management of its assets and liabilities. Here is a detailed analysis based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory within a given period.
- Topbuild Corp's inventory turnover has fluctuated over the years, decreasing from 15.04 in 2020 to 8.80 in 2021, but has since improved to 11.34 in 2024.
- A higher inventory turnover indicates more efficient inventory management and quicker sales of goods.

2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects on credit sales from its customers.
- Topbuild Corp's receivables turnover has shown a general increasing trend, from 6.29 in 2020 to 7.09 in 2024.
- A higher receivables turnover suggests a shorter time for the company to collect payments from customers, improving cash flow.

3. Payables Turnover:
- The payables turnover ratio measures how many times a company pays its suppliers within a given period.
- Topbuild Corp's payables turnover has steadily increased from 7.31 in 2020 to 10.10 in 2024.
- A higher payables turnover indicates more prompt payments to suppliers, which may foster better relationships and potential discounts.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how effectively a company is utilizing its working capital to generate sales.
- Topbuild Corp's working capital turnover has varied over the years, peaking at 7.58 in 2021 but dropping to 4.01 in 2023 before recovering to 6.41 in 2024.
- A higher working capital turnover signifies efficient use of working capital to drive revenue generation.

In summary, Topbuild Corp has shown improvements in its inventory turnover, receivables turnover, payables turnover, and working capital turnover ratios over the years, indicating enhanced efficiency in managing inventory, collecting receivables, paying suppliers, and utilizing working capital to support sales growth. These trends suggest that the company is effectively managing its assets and liabilities to drive operational performance.

---

Average number of days

Topbuild Corp's activity ratios provide insights into how efficiently the company manages its assets and liabilities.

1. Days of Inventory on Hand (DOH): Topbuild Corp's DOH has shown some fluctuations over the years, ranging from a low of 24.28 days in 2020 to a high of 41.48 days in 2021. Despite the variability, the company has generally been able to maintain inventory for around 30-40 days, indicating a relatively efficient management of inventory levels.

2. Days of Sales Outstanding (DSO): Topbuild Corp's DSO has fluctuated as well, with a low of 51.46 days in 2024 to a high of 70.87 days in 2021. Overall, the company takes around 50-70 days to collect its receivables, which suggests that it might face challenges in timely collection of sales proceeds.

3. Number of Days of Payables: Topbuild Corp's payables days have shown a decreasing trend over the years, from 49.90 days in 2020 to 36.12 days in 2024. This indicates that the company is taking fewer days to pay its suppliers, which can be interpreted as a positive sign of managing trade credit efficiently.

In summary, while Topbuild Corp's inventory management appears reasonable, the company may need to focus on improving its collections process to reduce DSO. The decreasing trend in payables days indicates that the company is managing its payables effectively but should monitor for any impacts on supplier relationships.

---

Long-term

Topbuild Corp's long-term activity ratios provide insights into how effectively the company is utilizing its assets to generate sales.

1. Fixed Asset Turnover: This ratio measures the efficiency of the company in generating sales revenue from its fixed assets. The trend shows a consistent high turnover rate over the years. There was a slight decline from 2020 to 2021, but the ratio remained relatively stable and increased significantly in 2022 and maintained a strong performance in subsequent years. This suggests that Topbuild Corp is effectively utilizing its fixed assets to generate sales, as evidenced by the increasing turnover ratios.

2. Total Asset Turnover: This ratio indicates the efficiency of the company in generating sales from all its assets. The trend for Topbuild Corp shows fluctuations in this ratio over the years. There was a decrease in total asset turnover from 2020 to 2021, which could imply less efficient utilization of total assets to generate sales. However, the ratio improved in 2022, declined slightly in 2023, and increased again in 2024. Overall, the varying total asset turnover suggests that Topbuild Corp may have experienced some challenges in optimizing the use of all its assets efficiently.

In conclusion, Topbuild Corp's long-term activity ratios, particularly the fixed asset turnover, demonstrate consistent and effective utilization of fixed assets to generate sales. However, there are fluctuations in the total asset turnover, indicating opportunities for the company to improve the efficiency of using all its assets to drive revenue growth.