Kodiak Gas Services, Inc. (KGS)

Short-term

Turnover ratios

The activity ratios of Kodiak Gas Services, Inc. demonstrate notable fluctuations over the analyzed period, reflecting changes in operational efficiency and working capital management.

Inventory Turnover:
The inventory turnover ratio increased consistently from 3.71 as of December 31, 2022, to a peak of 7.89 by March 31, 2025. This upward trend indicates a progressively more efficient management of inventory, with the company turning over its inventory approximately twice as frequently by mid-2025 compared to the end of 2022. The significant jump between December 31, 2023 (5.21) and December 31, 2024 (6.95) further underscores improved inventory utilization.

Receivables Turnover:
Receivables turnover initially declined from 7.00 in December 2022 to a low of 3.66 in September 2024, suggesting a period of slower collection of receivables or a shift in credit terms. However, this ratio recovered somewhat to 5.60 by June 2025, indicating a return towards more efficient receivables management over the latter part of the period.

Payables Turnover:
The payables turnover ratio exhibits an overall upward trend, rising from 7.04 at the end of 2022 to a high of 15.32 as of June 30, 2025. Periods of notable increase, such as December 2024 (12.48), imply that the company is paying its suppliers more promptly or managing its payables more aggressively, which could influence cash flow and the company's relationship with suppliers.

Working Capital Turnover:
This ratio displays considerable volatility. It starts at a high of 47.00 at December 31, 2022, decreases sharply to 16.38 by March 31, 2023, and further fluctuates in subsequent periods. Notably, the ratio peaks again at 54.79 during June 30, 2024, before declining to 11.38 in September 2024, then rebounding to 39.95 by June 30, 2025. These fluctuations suggest varying levels of sales relative to working capital invested, possibly reflecting operational adjustments, seasonality, or strategic changes in working capital management.

Overall, the data indicate that Kodiak Gas Services, Inc. has shown improvements in managing inventory and payables efficiently, alongside a recovery in receivables collection efficiency. The significant variability in working capital turnover underscores the need for ongoing operational oversight to maintain stable performance.

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Average number of days

The activity ratios for Kodiak Gas Services, Inc. demonstrate notable trends over the specified periods, reflecting changes in inventory management, receivables, and payables.

Days of Inventory on Hand (DOH):
The company's inventory holding period shows a consistent decline from 98.51 days as of December 31, 2022, to 52.49 days by December 31, 2024, with a slight uptick to 47.77 days at the end of June 2025. This downward trend indicates improved inventory turnover and more efficient inventory management, reducing the amount of capital tied up in stock.

Days of Sales Outstanding (DSO):
The receivables collection period varies significantly over the analyzed periods. Initially, DSO increased from 52.13 days at December 31, 2022, to a peak of 99.73 days on September 30, 2024. This suggests a lengthening of the credit collection cycle, which could imply either more lenient credit terms or challenges in receivables collection. Subsequently, DSO decreases again to 78.40 days by March 31, 2025, indicating some improvement in cash collection processes. Overall, the fluctuation reflects periods of slower receivables turnover offset by phases of better collection efficiency.

Number of Days of Payables:
The payables period demonstrates a general decreasing trend from 51.87 days at year-end 2022 to 23.83 days as of June 30, 2025. The reduction signifies that the company is settling its obligations more quickly over time. Moreover, the decreasing days of payables may indicate improved cash flow management or strategic tightening of payment terms.

Overall Interpretation:
The observed reduction in inventory days suggests enhanced operational efficiency and possibly better demand forecasting or supply chain management. The fluctuation in DSO indicates variable receivables management, with periods of extended collection times potentially impacting liquidity, but recent improvements suggest efforts toward more effective cash collection. The shortening of payables days points toward healthier cash flow practices, reducing the company's reliance on extended credit from suppliers.

Together, these activity ratios reflect a company gradually optimizing its working capital management, with a particular focus on reducing inventory and payables days, while working to stabilize receivables collection times. This pattern is indicative of a strategic approach to improving operational efficiency and cash flow management.

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Long-term

The analysis of Kodiak Gas Services, Inc.'s long-term activity ratios reveals the following trends and insights:

Fixed Asset Turnover Ratio: The data indicates that the fixed asset turnover ratio was not available for December 31, 2022, March 31, 2023, December 31, 2023, March 31, 2024, and June 30, 2024. Starting from June 30, 2023, the ratio is recorded at 0.30, which slightly increased to 0.32 by September 30, 2023. The ratio continues to improve gradually, reaching 0.34 at the end of 2024 and further increasing to 0.37 by March 31, 2025. This upward trend suggests a steady enhancement in the utilization of fixed assets in generating revenue, implying more efficient deployment or possibly better asset management.

Total Asset Turnover Ratio: The total asset turnover ratio demonstrates a relatively stable trend, starting at 0.22 on December 31, 2022. It experiences minor fluctuations but generally shows a gradual upward progression over the analyzed periods. By March 31, 2025, the ratio reaches 0.29, indicating an increased efficiency in asset utilization to produce sales. The ratio varies modestly across quarters, with slight dips and rises, but the overall trajectory suggests improved asset management and operational efficiency over time.

Summary: The available data reflects a positive trajectory in Kodiak Gas Services' long-term activity ratios, particularly in fixed asset turnover, which shows consistent improvement beginning from mid-2023. The total asset turnover also indicates enhanced overall asset utilization, aligning with better operational performance. These trends collectively point toward more effective management of long-term assets, leading to increased revenue generation relative to the assets employed.