GMS Inc (GMS)
Cash conversion cycle
| Apr 30, 2025 | Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 56.43 | 56.89 | 58.30 | 63.91 | 58.28 |
| Days of sales outstanding (DSO) | days | 47.65 | 56.39 | 54.26 | 59.07 | 61.81 |
| Number of days of payables | days | 41.54 | 41.16 | 38.19 | 42.61 | 52.72 |
| Cash conversion cycle | days | 62.55 | 72.12 | 74.37 | 80.37 | 67.38 |
April 30, 2025 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 56.43 + 47.65 – 41.54
= 62.55
The cash conversion cycle (CCC) of GMS Inc over the period from April 2021 to April 2025 demonstrates notable fluctuations, reflecting changes in the company's operational efficiency concerning the management of accounts receivable, inventory, and accounts payable.
In April 2021, the CCC stood at approximately 67.38 days, indicating the number of days it took for GMS Inc to convert its investments in inventory and other resources into cash flows from sales, after accounting for the timing of its payable obligations. This initial figure suggests a relatively balanced cycle, with the company effectively managing its working capital to facilitate cash inflows within a reasonable period.
By April 2022, the CCC increased to approximately 80.37 days. This rise may have been driven by longer receivables, increased inventory holding periods, or changes in payable practices, which collectively extended the duration required to complete the cash conversion process. The increase implies a potential shift toward a less efficient cycle, possibly impacting liquidity and working capital management.
Subsequently, by April 2023, the CCC decreased somewhat to around 74.37 days, indicating a partial recovery towards more efficient cash flow management. Although still above the 2021 level, this reduction suggests efforts to optimize inventory turnover, receivables collection, or extend payables, thereby shortening the cycle.
In April 2024, the cycle further declined to approximately 72.12 days, continuing the trend of improvement. This progression implies sustained or enhanced operational efficiencies, aligning the cycle closer to pre-2022 levels.
The most recent data point from April 2025 shows a significant reduction in the CCC to approximately 62.55 days. This notable decrease indicates that GMS Inc has achieved substantial improvements in managing its working capital, likely through faster receivables collection, quicker inventory turnover, or more favorable payable practices. The shorter cycle enhances liquidity and reduces the cash tied up in operations, potentially supporting increased flexibility and profitability.
Overall, the trend from April 2021 to April 2025 reflects an improvement in GMS Inc’s cash conversion cycle, moving from a peak of approximately 80.37 days to a more streamlined cycle of around 62.55 days. This progressive reduction indicates increased operational efficiency and better working capital management, which can positively influence the company's cash flow position and financial health.
Peer comparison
Apr 30, 2025