GMS Inc (GMS)

Short-term

Turnover ratios

The analysis of GMS Inc.'s activity ratios over the specified period reveals insights into its operational efficiency and working capital management.

Inventory Turnover: This ratio measures how many times inventory is sold and replaced within a period. The data indicates a declining trend from approximately 7.47 in July 2020 to a low of around 4.77 in October 2021, suggesting a slowdown in inventory sales velocity during that interval. Subsequently, it exhibits a gradual recovery, reaching approximately 6.53 by April 2024, with minor fluctuations thereafter, including a slight uptick to 6.53 in October 2024 and a stabilization around 6.46 by January 2025. The persistence of a relatively stable inventory turnover rate in recent periods suggests improved inventory management or shifts in sales patterns.

Receivables Turnover: This ratio reflects the efficiency in collecting receivables from customers. Initially, it remains relatively stable around 7.4 to 7.65 in 2020 and early 2021. A notable decline occurs in April 2021 to approximately 5.90, potentially indicating slower collections or increased receivables. Since then, the ratio exhibits variability, with periods of recovery reaching above 7.0, notably an increase to approximately 7.14 in January 2025, indicating an improvement in receivable collection efficiency over time. Fluctuations suggest adjustments in credit policies or collection processes.

Payables Turnover: This ratio measures how swiftly the company pays its suppliers. Early data shows higher turnover rates (e.g., around 11.89 in July 2020), indicating prompt payments. A significant dip occurs in April 2021, where the ratio drops to approximately 6.92, possibly reflecting extended payment terms or delays. Post this period, the ratio fluctuates between about 8.79 and 13.41, with recent figures around 11.73 in January 2025, denoting a tendency toward quicker payments over time. These fluctuations may be influenced by negotiation terms, supplier relationships, or liquidity considerations.

Working Capital Turnover: This ratio indicates how effectively working capital supports sales. The data reveals fluctuations, starting at approximately 6.25 in July 2020, declining marginally during 2021, and then generally trending upwards in 2022 and 2023, reaching roughly 7.63 in April 2025. The rising trend suggests increasing efficiency in utilizing working capital to generate sales, though periods of slight decline imply cyclical adjustments or strategic changes in working capital deployment.

Overall, the activity ratios reflect a company navigating periods of operational adjustments, with inventory and receivables management improving over time, and payables patterns becoming more consistent. The stability and gradual improvement in these ratios signify efforts towards operational efficiency, though some volatility remains, warranting ongoing monitoring for sustained performance enhancements.

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Average number of days

The analysis of GMS Inc’s activity ratios over the period from July 2020 through October 2025 reveals several noteworthy trends with implications for operational efficiency and working capital management.

Days of Inventory on Hand (DOH):
The DOH metric indicates the average number of days inventory remains on hand. Starting at approximately 48.84 days in July 2020, there was a general upward trend, peaking at around 76.60 days in October 2021. This increase suggests a period during which inventory levels were relatively high or turnover was slower, possibly reflecting strategic inventory build-up or market conditions leading to slower sales. Post-October 2021, the DOH shows a decreasing tendency, stabilizing around 55 to 58 days by the end of the observation period, indicating improved inventory management and faster turnover rates. This stabilization suggests efforts to optimize inventory levels and respond effectively to sales demand. The overall trend points toward a period of inventory accumulation followed by normalization and efficiency improvements.

Days of Sales Outstanding (DSO):
DSO measures the average number of days it takes to collect receivables from customers. Initially, in July 2020, DSO stood at approximately 49.2 days, with fluctuations observed over the period. Notably, there was an increase reaching 68.96 days by October 2021, signaling potential delays in receivables collection during that period. Since then, the DSO demonstrates variability but generally trends downward, reaching approximately 47.65 days by April 2025. This decline indicates enhanced receivables collection efficiency, with the company exhibiting a tendency toward faster revenue realization and improved cash flow management over time.

Days of Payables:
This ratio reflects the average number of days GMS Inc takes to settle its accounts payable. Starting at roughly 30.7 days in July 2020, the number fluctuated over the period but generally remained below 40 days, with some increases, notably reaching 52.72 days in April 2021. The most recent data points, around 31 to 41 days, suggest a relatively consistent and moderate payables management, balancing creditor terms with cash flow considerations. The pattern indicates that GMS Inc tends to maintain a steady payment cycle, neither stretching payables excessively nor paying too quickly, which is indicative of efficient working capital management.

Overall Observations:
The activity ratios collectively portray a company that initially experienced a phase of inventory buildup and equated receivables delays, particularly around late 2020 and early 2021. Over the subsequent years, there is a clear trend toward operational efficiency, characterized by reduced DSO and stabilized DOH. The manageable payables period further supports a balanced approach to working capital management. This progression underscores efforts to optimize sales and collection cycles, enhance inventory turnover, and maintain healthy supplier relationships, thereby contributing positively to liquidity and operational effectiveness.

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Long-term

The analysis of GMS Inc.'s long-term activity ratios reveals the following trends over the reporting periods:

1. Fixed Asset Turnover: This ratio exhibits fluctuations but generally demonstrates a stable to modestly upward trend from July 31, 2020, through October 31, 2023. The ratio increased from 7.75 in July 2020 to a peak of 10.49 in October 2020, indicating a significant improvement in the efficiency of utilizing fixed assets to generate sales during that period. Subsequently, the ratio stabilized around the 8.75 to 10.28 range, with minor fluctuations, before declining slightly to 8.75 in October 2023. This suggests relatively consistent utilization of fixed assets over the observed period, with some variation possibly reflecting operational adjustments or asset base changes.

2. Total Asset Turnover: This ratio shows a relatively steady upward trend from 1.44 in July 2020, reaching a high of 1.65 in January 2024. Thereafter, it experienced a slight decline to 1.39 in October 2024, followed by a gradual recovery to 1.47 by April 2025. The overall trend indicates an improvement in the efficiency of total asset utilization over time, although with some short-term fluctuations. These changes could be attributable to variations in sales relative to the asset base, reflecting operational efficiency and asset management effectiveness.

In summary, GMS Inc. has demonstrated generally stable and improving long-term asset utilization ratios over the analyzed periods. The increase in fixed and total asset turnover ratios suggests enhanced operational efficiency and better deployment of assets to generate sales, with some periods showing minor fluctuations likely due to organizational or market factors.