GMS Inc (GMS)
Liquidity ratios
| Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | Apr 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.17 | 2.19 | 2.06 | 1.96 | 2.03 |
| Quick ratio | 1.50 | 1.49 | 1.36 | 1.43 | 1.30 |
| Cash ratio | 0.22 | 0.23 | 0.15 | 0.30 | 0.44 |
The liquidity ratios of GMS Inc have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has been relatively stable, ranging from 1.96 to 2.19. This indicates that GMS Inc has been able to cover its short-term liabilities comfortably over the years.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. GMS Inc's quick ratio has also been fairly steady, ranging from 1.30 to 1.49. This suggests that the company has a solid ability to meet its short-term obligations without relying on inventory.
The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has shown more variability compared to the other ratios. The cash ratio has fluctuated from 0.15 to 0.44 over the past five years. A lower cash ratio indicates that GMS Inc may have a lower level of cash relative to its current liabilities in certain years.
Overall, based on the liquidity ratios analyzed, GMS Inc appears to have maintained a relatively strong liquidity position over the years, with the ability to meet its short-term obligations comfortably, although the cash ratio fluctuates more significantly. It is important for the company to continue monitoring its liquidity position to ensure it can effectively meet its financial obligations as they come due.
Additional liquidity measure
| Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | Apr 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 76.07 | 75.71 | 81.67 | 74.36 | 51.60 |
The cash conversion cycle of GMS Inc has shown fluctuations over the past five years, ranging from 51.60 days in 2020 to 81.67 days in 2022. The company's efficiency in managing its cash flows and working capital seems to have improved in 2021 and 2023, with lower days required to convert investment in inventory into cash receipts from sales. However, there was a slight increase in the cash conversion cycle in 2024 compared to the previous year.
Overall, GMS Inc's cash conversion cycle indicates the time it takes for the company to convert its investments in inventory into cash received from customers. A lower cash conversion cycle is generally preferred as it signifies efficient management of working capital. GMS Inc should continue to focus on optimizing its working capital management to ensure a healthy and efficient cash conversion cycle in the future.