RPM International Inc (RPM)

Short-term

Turnover ratios

The activity ratios for RPM International Inc across the period from May 2021 to May 2025 exhibit several notable trends and nuances:

Inventory Turnover:
This ratio reflects how efficiently the company manages its inventory. The data indicates a decline from 3.95 in May 2021 to 3.53 in May 2022, suggesting a slowdown in inventory turnover during this period. Subsequently, the ratio increases steadily, reaching 3.97 in May 2023 and further rising to 4.52 in May 2024, before slightly decreasing to 4.17 in May 2025. The overall trend signifies an initial reduction in inventory turnover efficiency followed by a recovery and improvement, potentially reflecting better inventory management or changes in sales velocity.

Receivables Turnover:
This ratio measures the efficiency of collection from customers. The figures show a slight decrease from 4.77 in May 2021 to 4.68 in May 2022, then a modest increase to 4.83 in May 2023. The upward trend continues into May 2024, reaching 4.97, before a slight decline to 4.89 in May 2025. The upward movement indicates an improving collection process and better receivables management over the period, with minor fluctuations.

Payables Turnover:
This ratio assesses the company's payment practices to suppliers. The data indicates a consistent increase from 5.16 in May 2021 to 6.62 in May 2023, with the ratio peaking at that point, implying a tendency towards more frequent or faster payments. Post-2023, the ratio stabilizes slightly at 6.65 in May 2024 but then decreases to 5.72 in May 2025. The pattern suggests an initial phase of tightening payment cycles, possibly reflecting improved liquidity or negotiating terms, followed by a slight easing in payments towards suppliers.

Working Capital Turnover:
This ratio measures how effectively working capital is utilized to generate sales. It shows a notable increase from 4.21 in May 2021 to a peak of 5.91 in May 2022, before declining to 4.29 in May 2023. Subsequent years display a modest recovery, with a value of 5.13 in May 2024, then decreasing again to 4.33 in May 2025. The fluctuations point to variable efficiency in using working capital, with a period of heightened efficiency in 2022 followed by a decline, and limited stabilization thereafter.

Summary:
The analyzed activity ratios reveal that RPM International Inc experienced periods of both improvement and decline in operational efficiency. The inventory turnover improved significantly after a previous decline, indicating better inventory management. Receivables collection efficiency generally improved over the period, while payables turnover showed an initial increase followed by a slight easing. Working capital utilization was more efficient in 2022 but saw fluctuations in subsequent years. Overall, the ratios suggest a company that has been actively managing its working capital components, with signs of recovery and adjustment in operational practices over the analyzed period.

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Average number of days

The analysis of RPM International Inc.’s activity ratios over the period from May 2021 to May 2025 indicates notable trends in inventory management, receivables collection, and payables utilization.

Days of Inventory on Hand (DOH):
The DOH ratio fluctuated during the period, initially increasing from 92.51 days in May 2021 to a peak of 103.54 days in May 2022. This increase suggests that inventory was held for a longer period relative to sales, potentially indicating slower inventory turnover or increased stockpiling during that time. Subsequently, the ratio decreased to 91.93 days in May 2023, signaling an improvement, followed by a further reduction to 80.80 days in May 2024. This downward trend points to enhanced inventory efficiency, with inventory being converted to sales more promptly. Slightly increasing to 87.53 days in May 2025, this metric remains below the peak levels seen in 2022, indicating ongoing efforts to optimize inventory levels, although some increase suggests periods of higher inventory holding.

Days of Sales Outstanding (DSO):
The DSO remained relatively stable throughout the period, with minor fluctuations: starting at 76.56 days in May 2021, increasing marginally to 77.96 days by May 2022, and then decreasing slightly to 75.60 days in May 2023. The figures further declined to 73.51 days in May 2024 before rising moderately to 74.71 days in May 2025. This stability and slight variation indicate consistent receivables collection efforts, with the company maintaining a stable credit policy and collection efficiency.

Number of Days of Payables:
The payables period showed a decreasing trend from 70.73 days in May 2021 to a low of 55.13 days in May 2023. This reduction suggests that RPM International Inc. was taking fewer days to settle its accounts payable, possibly indicating a tighter cash management or improved payables strategy during this period. After reaching the lowest point in May 2023, the ratio increased slightly to 54.88 days in May 2024 and then rose more substantially to 63.83 days in May 2025. The increase in payables days may reflect a conscious effort to extend payment terms or a response to improved liquidity conditions, allowing for longer intervals to settle supplier obligations.

Summary:
Overall, RPM International Inc. has demonstrated improved inventory management efficiency from 2022 onwards, reducing the inventory days on hand. The receivables collection remains stable, indicating consistent credit and collection policies. The payables cycle shortened through 2023, before slightly lengthening in subsequent years, which may signify strategic adjustments in payment timing. These patterns collectively suggest a company that is actively managing its working capital components to enhance liquidity and operational efficiency.

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Long-term

The long-term activity ratios for RPM International Inc., specifically the fixed asset turnover and total asset turnover, exhibit notable fluctuations over the analyzed period from May 31, 2021, to May 31, 2025.

The fixed asset turnover ratio, which measures the efficiency of the company's use of its fixed assets to generate sales, experienced an initial increase from 4.82 in 2021 to a peak of 6.08 in 2022. This suggests improved utilization of fixed assets during that period. However, subsequent years saw a decline, with the ratio decreasing to 5.85 in 2023, then to 4.41 in 2024, and further down to 4.00 in 2025. The downward trend indicates a diminishing efficiency in utilizing fixed assets to generate sales over time.

Similarly, the total asset turnover ratio, which reflects the company's ability to generate sales from its entire asset base, shows a relatively stable to modestly increasing trend initially, progressing from 0.98 in 2021 to 1.07 in 2023. This suggests a period of improved overall asset efficiency. Nevertheless, in 2024, the ratio increased slightly to 1.11, indicating a marginally better utilization of total assets. By 2025, the ratio declines to 0.95, implying a decrease in the efficiency of total asset utilization relative to sales generation.

Overall, the data suggests that RPM International Inc. experienced a period of enhanced asset utilization efficiency up to 2023, particularly in fixed assets. However, this trend reversed after 2023, with both fixed asset and total asset turnover ratios showing declines. These shifts may reflect changes in the company's asset base, operational adjustments, or strategic realignments affecting how efficiently assets are leveraged to produce sales in subsequent years.