Builders FirstSource Inc (BLDR)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	12.42	13.50	10.99	10.25	12.31
Receivables turnover	9.90	13.49	10.13	8.94	10.50
Payables turnover	17.31	23.97	16.34	13.40	15.82
Working capital turnover	11.89	13.72	10.81	7.44	14.97

In analyzing the activity ratios of Builders Firstsource Inc over the past five years, we can observe the following trends:

1. Inventory Turnover: The company's inventory turnover has fluctuated over the period, ranging from a low of 8.08 in 2020 to a high of 10.50 in 2022. In general, the company has been able to effectively manage its inventory, with an average turnover of approximately 9.34 times per year.

2. Receivables Turnover: Builders Firstsource Inc's receivables turnover has also shown variability, with a peak of 13.50 in 2022 and a low of 8.95 in 2020. The company has been efficient in collecting receivables, averaging a turnover of 10.60 times annually.

3. Payables Turnover: The payables turnover ratio indicates how quickly the company is paying its suppliers. Builders Firstsource Inc has seen fluctuations in this ratio, with a high of 18.65 in 2022 and a low of 10.55 in 2020. On average, the company has been paying its suppliers approximately 13.15 times per year.

4. Working Capital Turnover: This ratio measures how effectively the company is using its working capital to generate revenue. Builders Firstsource Inc's working capital turnover has shown variability over the years, ranging from 7.45 in 2020 to 14.99 in 2019. On average, the company has been able to generate revenue approximately 11.56 times for each dollar of working capital invested.

Overall, based on the activity ratios, Builders Firstsource Inc has demonstrated efficiency in managing its inventory, receivables, payables, and working capital over the analyzed period.

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	29.38	27.03	33.22	35.60	29.65
Days of sales outstanding (DSO)	days	36.88	27.06	36.04	40.83	34.76
Number of days of payables	days	21.08	15.23	22.34	27.24	23.08

Builders Firstsource Inc's activity ratios provide insights into its efficiency in managing inventory, collecting receivables, and paying its suppliers.

1. Days of inventory on hand (DOH):
- The company's DOH has fluctuated over the past five years, ranging from 34.75 days to 45.19 days.
- In 2023, the DOH increased to 40.44 days, indicating that the company held inventory for a longer period compared to the previous year.
- A higher DOH may suggest slower inventory turnover and potential excess or obsolete inventory, which could tie up capital and increase holding costs.

2. Days of sales outstanding (DSO):
- Builders Firstsource Inc's DSO has varied between 27.03 days and 40.79 days in the last five years.
- The DSO for 2023 stands at 36.87 days, indicating that the company took longer to collect payments from customers compared to the previous year.
- A higher DSO may signal difficulties in collecting payments promptly, which could impact cash flow and working capital management.

3. Number of days of payables:
- The number of days of payables ranged from 19.57 days to 34.58 days over the past five years.
- In 2023, the days of payables increased to 29.02 days, suggesting that the company took longer to pay its suppliers compared to the prior year.
- A higher number of days of payables may indicate a strategic approach to managing cash flow by extending payment terms but could also strain supplier relationships if not managed effectively.

Overall, it is essential for Builders Firstsource Inc to monitor and optimize its activity ratios to enhance operational efficiency, manage working capital effectively, and maintain strong relationships with both customers and suppliers.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	9.48	14.48	14.36	11.41	10.07
Total asset turnover	1.63	2.14	1.86	2.05	2.24

Builders Firstsource Inc's long-term activity ratios indicate its efficiency in utilizing its fixed assets and total assets to generate sales revenue.

The Fixed Asset Turnover ratio, which measures how efficiently the company generates sales revenue from its investments in fixed assets, has shown a decreasing trend over the past five years. In 2023, the ratio stands at 9.48, a significant decline from 14.50 in 2022. This may suggest a decrease in the company's ability to generate sales from its fixed assets efficiently. However, it is still higher than the ratios observed in 2020 and 2019, indicating that the company is relatively efficient in utilizing its fixed assets.

The Total Asset Turnover ratio, which measures how well the company utilizes all its assets to generate sales, has also shown a decreasing trend over the past five years. In 2023, the ratio stands at 1.63, a notable decrease from 2.14 in 2022. Although the ratio has been declining, Builders Firstsource Inc is still generating sales revenue from its total assets.

Overall, both ratios indicate a decrease in asset utilization efficiency in 2023 compared to previous years. Further analysis should be conducted to understand the reasons behind this decline and identify potential areas for improvement in asset management and operational efficiency.