GMS Inc (GMS)
Cash conversion cycle
| Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | Apr 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 42.24 | 43.88 | 48.07 | 42.28 | 35.11 |
| Days of sales outstanding (DSO) | days | 64.39 | 60.58 | 65.65 | 70.32 | 45.63 |
| Number of days of payables | days | 30.56 | 28.74 | 32.04 | 38.25 | 29.15 |
| Cash conversion cycle | days | 76.07 | 75.71 | 81.67 | 74.36 | 51.60 |
April 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 42.24 + 64.39 – 30.56
= 76.07
The cash conversion cycle of GMS Inc has exhibited fluctuations over the past five years. In FY2024, the company's cash conversion cycle was 76.07 days, showing a slight increase from the previous year. The increase in the cash conversion cycle indicates that GMS Inc took slightly longer to convert its investments in inventory back into cash during the year.
Compared to FY2022, the cash conversion cycle improved in FY2023, but then slightly worsened in FY2024. This indicates that the company was operating more efficiently in FY2023 in terms of managing its inventory, receivables, and payables in order to generate cash.
In comparison to FY2021 and FY2020, the cash conversion cycle has been generally higher in the more recent years, suggesting that GMS Inc may be facing challenges in managing its working capital efficiently.
Overall, a longer cash conversion cycle can tie up cash within the company's operations for a longer period, potentially impacting liquidity and the ability to fund growth or meet financial obligations promptly. GMS Inc should continue to monitor and manage its cash conversion cycle effectively to optimize its working capital management and overall financial performance.
Peer comparison
Apr 30, 2024