GMS Inc (GMS)
Cash conversion cycle
| Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 42.24 | 43.42 | 42.04 | 43.94 | 43.88 | 44.88 | 44.79 | 47.31 | 48.07 | 54.97 | 56.76 | 52.37 | 42.28 | 52.37 | 48.08 | 44.82 | 45.89 | 42.82 | 53.64 | 61.24 |
| Days of sales outstanding (DSO) | days | 64.40 | 63.19 | 70.24 | 64.89 | 60.59 | 61.87 | 70.68 | 68.84 | 65.65 | 68.75 | 80.76 | 78.10 | 70.33 | 49.73 | 52.34 | 50.77 | 45.63 | 48.82 | 54.56 | 54.25 |
| Number of days of payables | days | 30.56 | 24.09 | 27.61 | 26.54 | 28.74 | 24.05 | 28.45 | 29.74 | 32.04 | 27.56 | 36.10 | 36.69 | 38.25 | 25.23 | 26.07 | 28.17 | 38.10 | 20.78 | 30.85 | 34.15 |
| Cash conversion cycle | days | 76.08 | 82.51 | 84.67 | 82.29 | 75.72 | 82.70 | 87.01 | 86.41 | 81.68 | 96.16 | 101.41 | 93.78 | 74.36 | 76.87 | 74.35 | 67.42 | 53.43 | 70.86 | 77.36 | 81.34 |
April 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 42.24 + 64.40 – 30.56
= 76.08
The cash conversion cycle of GMS Inc has shown some variability over the past several periods. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Analyzing the data provided, we can see that the cash conversion cycle for GMS Inc has ranged between 53.43 days to 101.41 days over the past few years. A lower cash conversion cycle is generally preferred as it indicates that the company is able to generate cash quickly from its operations.
It is noteworthy that GMS Inc experienced a decrease in its cash conversion cycle from January 2022 to July 2022, indicating an improvement in efficiency in converting its investments into cash during this period. However, there was an increase in the cash conversion cycle from July 2022 to January 2023, and the cycle fluctuated between 74.36 days to 96.16 days over the next few periods.
Overall, GMS Inc should focus on optimizing its inventory management, accounts receivable collection, and accounts payable terms to reduce its cash conversion cycle and improve its cash flow efficiency. Tracking this metric regularly can help the company identify areas for improvement in its working capital management.
Peer comparison
Apr 30, 2024