GMS Inc (GMS)

Short-term

Turnover ratios

The activity ratios for GMS Inc over the period from April 30, 2021, to April 30, 2025, show notable trends and stability in core operational efficiencies.

Inventory Turnover: The ratio begins at 6.26 in April 2021, decreases slightly to 5.71 in April 2022, indicating a marginal slowdown in inventory selling activity during that period. However, it recovers to 6.26 by April 2023 and continues to improve gradually, reaching 6.42 in April 2024 and 6.47 in April 2025. This suggests an overall stability in managing inventory levels relative to sales, with a slight upward trend in recent years, indicating improving inventory management efficiency.

Receivables Turnover: The ratio shows a steady increase from 5.90 in April 2021 to 6.18 in April 2022, further rising to 6.73 in April 2023. In subsequent years, it fluctuates slightly, with 6.47 in April 2024 and a significant increase to 7.66 in April 2025. This trend indicates an improvement in the collection of receivables over time, enhancing cash flow efficiency.

Payables Turnover: The ratio exhibits a consistent upward trend, starting at 6.92 in April 2021, then increasing to 8.57 in April 2022 and further to 9.56 in April 2023. Slight declines occur in the following years, with 8.87 in April 2024 and 8.79 in April 2025, but the overall trend remains elevated. This pattern suggests that GMS Inc's payments to suppliers have become more frequent or efficient, reflecting improved accounts payable management.

Working Capital Turnover: The ratio begins at 6.11 in April 2021, shows minor fluctuations around 6.32 in 2022 and 2023, and then dips slightly to 6.24 in April 2024. A significant rise to 7.63 occurs in April 2025, indicating an increased utilization of working capital to generate sales. The upward movement in recent years points to enhanced operational efficiency in deploying working capital resources.

Overall, the activity ratios reflect a company demonstrating improved efficiency in managing receivables and payables, with inventory management remaining relatively stable and slightly improving. The notable increase in working capital turnover by April 2025 suggests GMS Inc is increasingly effective at generating sales from its working capital base.

---

Average number of days

The analysis of GMS Inc.'s activity ratios over the period from April 2021 to April 2025 reveals several noteworthy trends concerning inventory management, receivables collection, and payables payment behaviors.

Days of Inventory on Hand (DOH):
The DOH metric demonstrates relatively stable inventory levels with minor fluctuations. It increased from approximately 58.28 days in April 2021 to a peak of about 63.91 days in April 2022, indicating a slight accumulation of inventory during that period. Subsequently, it decreased to approximately 58.30 days in April 2023 and further declined to about 56.89 days in April 2024, and finally to 56.43 days in April 2025. This overall downward trend post-2022 suggests improved inventory turnover rates, potentially reflecting enhanced inventory management or efforts to reduce excess stock.

Days of Sales Outstanding (DSO):
The DSO figures show a decreasing trend over the analyzed years, from 61.81 days in April 2021 to approximately 47.65 days in April 2025. The reduction indicates a gradual improvement in receivables collection efficiency, with customers paying their dues more promptly over time. The notable decline around 2023 and 2024 points to a concerted effort to shorten the cash conversion cycle related to receivables.

Number of Days of Payables:
The data shows that the days payable outstanding (DPO) fluctuated within a narrow range, from 52.72 days in April 2021 to approximately 41.54 days in April 2025. The DPO decreased from 52.72 days in 2021 to below 42 days in subsequent years before slightly increasing again in 2025. The initial decrease reflects a tendency to settle payables more quickly, while the later slight increase might indicate more extended payment terms or strategic payment scheduling.

Overall Interpretation:
The combined analysis indicates a pattern of operational efficiency improvements. The decreasing DOH suggests better inventory turnover, while the declining DSO signifies enhanced receivables collection processes. The relatively stable DPO, with a slight upward trend in later years, indicates a balanced approach to managing payables, possibly leveraging extended payment terms to optimize working capital. Overall, these shifts contribute to a potentially more efficient and liquid working capital cycle for GMS Inc.

---

Long-term

The analysis of GMS Inc.'s long-term activity ratios reveals the following trends between April 30, 2021, and April 30, 2023. The fixed asset turnover ratio increased from 7.68 in 2021 to 9.20 in 2022, indicating an improvement in the company's efficiency in utilizing its fixed assets to generate sales. This upward movement suggests that GMS Inc. became more effective at leveraging its property, plant, and equipment over this period. However, the ratio experienced a slight decline to 9.10 in 2023, remaining relatively stable compared to the previous year, which signals a marginal reduction in fixed asset efficiency but not a significant deterioration.

In terms of total asset turnover, the ratio increased steadily from 1.33 in 2021 to 1.49 in 2022, then further to 1.63 in 2023. This consistent upward trend demonstrates enhanced overall asset utilization, reflecting improved asset management and operational efficiency. The company appears capable of generating more sales per dollar of total assets as time progresses.

Looking beyond 2023, the ratios are projected to slightly decline but remain at levels that indicate relatively stable asset utilization. The fixed asset turnover is forecasted to stabilize around 9.10, while the total asset turnover is expected to decrease marginally to approximately 1.44 by April 2025. This suggests that, although there might be some minor fluctuations, GMS Inc. maintains its efficiency in asset utilization over the longer term, with no significant weakening implied by the projections.

Overall, the company's long-term activity ratios signify a positive trend in asset utilization efficiency up to 2023, with stability anticipated in the ensuing years. This pattern reflects effective management of fixed and total assets, supporting sustainable operational performance.