GMS Inc (GMS)

Short-term

Turnover ratios

Inventory turnover for GMS Inc has been relatively stable over the past five years, ranging between 7.59 and 10.40 times. This indicates that the company efficiently manages its inventory levels, with its inventory turning over approximately 8 times a year on average.

Receivables turnover has shown some fluctuation but has generally remained within a reasonable range, implying that the company is effective in collecting payments from customers. A higher receivables turnover ratio suggests quicker collection of accounts receivable, with GMS Inc collecting payments approximately 5 to 8 times a year.

Payables turnover has also varied over the years but has consistently been above 9 times, indicating that the company efficiently manages its accounts payable. The higher payables turnover ratio suggests that GMS Inc pays its suppliers relatively quickly, turning over its liabilities around 9 to 12 times a year.

Working capital turnover has been relatively stable over the years, reflecting the company's ability to generate revenue from its working capital. A working capital turnover ratio of around 6 suggests that GMS Inc generates sales revenues that are approximately 6 times its working capital.

Overall, the activity ratios for GMS Inc illustrate efficient management of inventory, receivables, payables, and working capital, indicating a well-operated business in terms of asset management and working capital utilization.

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Average number of days

GMS Inc's activity ratios provide insights into the management of its inventory, receivables, and payables over the past five years.

The Days of Inventory on Hand (DOH) measures how efficiently the company manages its inventory. GMS Inc's DOH has fluctuated over the years, ranging from 35.11 days in 2020 to 48.07 days in 2022. This indicates that the company had its inventory on hand for an average of around 42 days in the most recent year, which is an improvement compared to the previous year. A lower DOH is generally considered favorable as it signifies a quicker turnover of inventory.

The Days of Sales Outstanding (DSO) metric reflects the average number of days it takes for the company to collect its accounts receivable. GMS Inc's DSO has also shown variability, with a peak of 70.32 days in 2021 and a low of 45.63 days in 2020. In the most recent year, the company took around 64 days on average to collect its receivables. A lower DSO suggests that the company efficiently manages its credit sales and collects payments promptly.

The Number of Days of Payables metric indicates how quickly the company pays its suppliers. GMS Inc's payables days have ranged from 28.74 days in 2023 to 38.25 days in 2021. In the latest year, the company took around 30 days on average to pay its suppliers. A longer payment period can be beneficial for cash flow management, but it may strain relationships with suppliers if extended too far.

Overall, GMS Inc's activity ratios suggest that the company has been effectively managing its inventory, receivables, and payables over the years, with some fluctuations in performance. Continued monitoring and improvement in these areas can contribute to the company's operational efficiency and financial health.

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Long-term

The long-term activity ratios of GMS Inc provide insights into the efficiency with which the company utilizes its fixed assets and total assets to generate sales revenue.

The fixed asset turnover ratio has shown a general decreasing trend over the past five years, indicating that the company has become less efficient in generating sales from its fixed assets. However, it is important to note that the ratio still remains relatively high, suggesting that GMS Inc is able to generate significant sales relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio has fluctuated over the years but has generally remained within a reasonable range. This ratio indicates how well the company is able to generate sales from its total assets, including both fixed and current assets. A higher total asset turnover ratio signifies better asset utilization and efficiency in generating sales.

Overall, while GMS Inc may have experienced a slight decline in its efficiency in generating sales from fixed assets, the company has maintained a reasonable level of asset turnover, indicating effective management of its assets to generate revenue.