Topbuild Corp (BLD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 12.24 | 9.89 | 8.80 | 15.04 | 16.01 |
| Receivables turnover | 6.41 | 5.92 | 5.15 | 6.29 | 6.03 |
| Payables turnover | 9.51 | 8.90 | 6.72 | 7.31 | 7.75 |
| Working capital turnover | 4.01 | 6.52 | 7.58 | 6.11 | 8.53 |
The activity ratios of TopBuild Corp provide insights into the efficiency of the company's operations in managing its assets and liabilities.
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company is managing its inventory. TopBuild Corp's inventory turnover has been fluctuating over the years, with a significant decrease in 2022 and 2023 compared to the previous years. This may indicate potential issues with inventory management or changing market demand.
2. Receivables Turnover:
- The receivables turnover ratio reflects how quickly the company collects payments from its customers. TopBuild Corp's receivables turnover has been relatively stable over the years, indicating consistent collection practices. However, it is slightly lower in 2023 compared to the previous years, which could imply a potential delay in collection.
3. Payables Turnover:
- The payables turnover ratio measures how quickly the company pays its suppliers. TopBuild Corp's payables turnover has shown fluctuations, with a notable increase in 2023. This may suggest that the company is taking longer to pay its suppliers, which could have implications on supplier relationships.
4. Working Capital Turnover:
- The working capital turnover ratio evaluates how efficiently the company is using its working capital to generate sales. TopBuild Corp's working capital turnover has exhibited variability over the years, with a significant decrease in 2023. A lower working capital turnover ratio could indicate a decrease in sales relative to the working capital investment.
Overall, analyzing these activity ratios provides valuable insights into TopBuild Corp's management of its resources and relationships with suppliers and customers. It is crucial for the company to monitor these ratios closely to ensure operational efficiency and sustainable growth.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 29.82 | 36.92 | 41.48 | 24.28 | 22.79 |
| Days of sales outstanding (DSO) | days | 56.95 | 61.64 | 70.87 | 58.07 | 60.54 |
| Number of days of payables | days | 38.39 | 41.00 | 54.31 | 49.90 | 47.08 |
Days of Inventory on Hand (DOH) measures how many days on average it takes for a company to sell its inventory. A lower DOH indicates efficient inventory management. TopBuild Corp's DOH has fluctuated over the years, from 28.01 days in 2019 to 51.27 days in 2021. The current DOH of 37.07 days in 2023 shows an improvement compared to 2022, suggesting better inventory turnover efficiency.
Days of Sales Outstanding (DSO) reflects the average number of days it takes for a company to collect payment after a sale. A lower DSO indicates faster cash conversion. TopBuild Corp's DSO has varied, with the lowest being 56.14 days in 2023 and the highest at 69.98 days in 2021. The decrease in DSO in 2023 compared to the prior year is a positive sign of improved cash collection efficiency.
Number of Days of Payables measures how long a company takes to pay its suppliers. A higher number indicates the company is taking longer to pay its obligations. TopBuild Corp's days of payables have fluctuated over the years, from 57.86 days in 2019 to 67.12 days in 2021. The decrease to 47.73 days in 2023 suggests the company is paying its suppliers more promptly compared to the previous year.
Overall, TopBuild Corp has shown fluctuations in its activity ratios over the years. The company has recently improved its inventory turnover efficiency and promptness in paying suppliers. Additionally, the decrease in DSO indicates better cash collection practices. The company should continue to monitor and manage these ratios to enhance operational efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 19.78 | 20.06 | 14.66 | 14.92 | 14.52 |
| Total asset turnover | 0.99 | 1.07 | 0.81 | 0.95 | 0.99 |
TopBuild Corp has shown relatively stable performance in terms of fixed asset turnover over the past five years, with ratios ranging between 14.25 and 19.76. This indicates that the company is efficient in generating sales revenue from its fixed assets, reflecting effective utilization of its long-term assets to generate sales.
In contrast, the total asset turnover ratio has fluctuated more significantly, ranging from 0.82 to 1.09. This ratio measures the company's ability to generate sales from all assets, both long-term and short-term. A total asset turnover ratio of around 1.0 suggests that TopBuild Corp is effectively utilizing its total assets to generate revenue.
Overall, the company's performance in terms of long-term activity ratios indicates strong operational efficiency and effective asset utilization, which is essential for sustainable growth and profitability.