RPM International Inc (RPM)

Short-term

Turnover ratios

The activity ratios of RPM International Inc., as reflected in the provided data, demonstrate noteworthy patterns over the analyzed periods.

Inventory Turnover:
The inventory turnover ratio exhibits a generally declining trend from a high of 4.43 on August 31, 2020, to a trough of 3.22 on November 30, 2022. Subsequently, the ratio begins an upward trajectory, reaching 4.52 by May 31, 2024, and maintaining a steady level around 4.03 to 4.33 through August 31, 2024, November 30, 2024, and February 28, 2025. Higher inventory turnover ratios suggest improved inventory management efficiency, with recent figures indicating a reversal of earlier declines, potentially reflecting enhanced inventory control or increased demand.

Receivables Turnover:
Receivables turnover ratios fluctuate within a range, initially rising from 4.87 on August 31, 2020, to a peak of 6.55 on February 29, 2024. This indicates increasingly efficient collection of accounts receivable over the period. Notably, after reaching this peak, the ratio declines somewhat but remains elevated, with a value of 4.89 on May 31, 2025. These movements suggest periods of improved receivables management, possibly aligned with tighter credit policies or better collection efforts.

Payables Turnover:
The payables turnover ratio exhibits variability with a general upward trend, starting at 6.60 on August 31, 2020, and peaking at 7.81 on February 28, 2023. Fluctuations thereafter indicate a pattern of paying suppliers more frequently relative to the payables outstanding, which could reflect a strategy to maintain good supplier relationships or manage supply chain commitments. The latest figures show ratios stabilizing around 6.71 as of May 31, 2025.

Working Capital Turnover:
The working capital turnover ratio shows significant fluctuation. It begins at 4.13 on August 31, 2020, peaks sharply at 7.39 on February 28, 2022, indicating efficient utilization of working capital during that period. Afterwards, there is a decline, reaching lows of approximately 3.52 on November 30, 2022, followed by a recovery trend, reaching around 4.82 on February 28, 2025. These dynamics reflect periods of both efficient working capital management and relative inefficiency, potentially driven by changes in sales volume, inventory levels, and receivables and payables management.

Overall, the activity ratios collectively depict a firm that has experienced periods of adjustment and improvement in operational efficiencies. The recent upward trends in inventory and receivables turnover ratios suggest enhanced operational effectiveness, while fluctuations in working capital turnover imply a responsive management approach to changing business conditions. The ratios indicate an ongoing effort to optimize asset utilization and liquidity management in alignment with strategic objectives.

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Average number of days

The activity ratios of RPM International Inc., specifically the days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, reveal insights into the company's operational efficiency and working capital management over the analyzed period.

Days of Inventory on Hand (DOH):
RPM's inventory holding period has generally increased from 82.43 days as of August 31, 2020, reaching peak levels around 113.47 days by November 2022. This indicates a trend toward managing higher levels of inventory, which might suggest slower inventory turnover or strategic inventory accumulation. However, there has been a noticeable improvement since late 2022, with DOH decreasing to approximately 80.80 days by May 2024, before slightly rising again to around 85.78 days by August 2024. Lower inventory days in the recent period could reflect improved inventory management or a shift towards leaner stock levels.

Days of Sales Outstanding (DSO):
Receivables collection periods exhibited variability, with DSO decreasing from 75.00 days in August 2020 to a recent low of approximately 55.26 days as of February 2025. This decline indicates enhanced efficiency in collecting receivables over time. The consistent reduction suggests that RPM International Inc. has improved its cash inflow cycle, leading to shorter periods of outstanding receivables and potentially better cash liquidity.

Number of Days of Payables:
The company’s payables period experienced fluctuations but generally declined from 55.34 days in August 2020 to 46.73 days in February 2023. This reduction implies a trend towards faster payment of suppliers or improved cash flow management. Post-February 2023, payables extended slightly, reaching up to approximately 63.83 days in May 2025, indicating a possible strategic extension of payment terms or liquidity considerations, aligning with credit terms negotiated with suppliers.

Overall Interpretation:
The trends suggest that RPM International Inc. has been focusing on optimizing its receivables collection process, reducing the time it takes to convert sales into cash. Simultaneously, inventory management has improved, reducing inventory holding periods in recent years. The payables pattern shows some flexibility, with a recent tendency to extend payment periods somewhat, balancing working capital needs. Collectively, these activity ratio patterns reflect a strategic effort to improve operating efficiency, optimize cash flow, and manage working capital effectively over the analyzed period.

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Long-term

The analysis of RPM International Inc.'s long-term activity ratios indicates distinct trends in asset utilization over the given periods. The Fixed Asset Turnover ratio, which measures how effectively the company employs its fixed assets to generate sales, exhibited a notable decline from the peak of approximately 6.55 on August 31, 2020, to a low of around 4.00 by May 2025. This downward trend suggests a reduction in the efficiency with which fixed assets are being utilized to produce revenue, potentially reflecting increased asset base without a proportional increase in sales or a deliberate strategy to invest in assets for future growth.

Conversely, the Total Asset Turnover ratio remained relatively stable with minor fluctuations but demonstrated a gradual upward trend from approximately 0.99 in August 2020 to a peak of around 1.15 in February 2024. This consistency indicates that, overall, the company's total assets have been reasonably well utilized to generate sales, with slight improvements over time. The slight declines in this ratio towards the last observed periods, notably dropping to approximately 0.95 by May 2025, may imply some efficiency concerns or strategic asset adjustments impacting overall asset productivity.

In summary, while RPM International Inc. showed a decreasing trend in the efficiency of fixed asset utilization, its total asset productivity remained relatively stable and slightly improving until early 2024, after which it experienced a modest decline. These patterns suggest a potential shift in asset management strategies or operational efficiencies, underscoring the importance of further analysis to determine underlying causes and strategic implications.