Advanced Drainage Systems Inc (WMS)
Activity ratios
Short-term
Turnover ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.42 | 0.37 | 0.35 | 1.38 | 1.40 |
| Receivables turnover | 8.90 | 10.01 | 8.10 | 8.37 | 8.16 |
| Payables turnover | 0.77 | 0.81 | 0.76 | 2.43 | 3.71 |
| Working capital turnover | 3.35 | 4.81 | 5.76 | 4.65 | 3.82 |
Advanced Drainage Systems Inc's activity ratios provide insight into how efficiently the company manages its assets and liabilities.
1. Inventory Turnover:
- The inventory turnover ratio has been fluctuating over the past five years, ranging from 0.35 to 1.40. This ratio indicates how many times the company's inventory is sold and replaced during the period.
- A lower inventory turnover may suggest excess inventory levels or slow-moving products, impacting cash flow and tying up resources.
2. Receivables Turnover:
- The receivables turnover ratio has varied between 8.10 and 10.01 over the same period. This ratio shows how efficiently the company collects payment from customers.
- A higher receivables turnover ratio indicates that the company is collecting its receivables quickly, improving liquidity.
3. Payables Turnover:
- The payables turnover ratio has also fluctuated, ranging from 0.76 to 3.71. This ratio measures how quickly the company pays its suppliers.
- A lower payables turnover may suggest that the company is taking longer to pay its bills, which could strain relationships with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio has ranged from 3.35 to 5.76. This ratio reflects how effectively the company utilizes its working capital to generate sales.
- A higher working capital turnover ratio indicates that the company efficiently uses its working capital to support its operations and generate revenue.
In summary, the analysis of Advanced Drainage Systems Inc's activity ratios suggests that the company has experienced fluctuations in its efficiency in managing inventory, receivables, payables, and working capital over the past five years. Monitoring and improving these ratios can help the company optimize its operational efficiency and financial performance.
Average number of days
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 859.68 | 989.19 | 1,049.21 | 264.68 | 260.11 |
| Days of sales outstanding (DSO) | days | 40.99 | 36.48 | 45.06 | 43.61 | 44.71 |
| Number of days of payables | days | 471.14 | 447.94 | 477.54 | 150.47 | 98.29 |
Advanced Drainage Systems Inc's activity ratios provide insights into how efficiently the company manages its inventories, collects its receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend shows a decrease in DOH over the years, indicating improvements in inventory management efficiency.
- In 2024, the company held inventory for an average of 859.68 days, suggesting that inventory turnover has increased compared to previous years.
2. Days of Sales Outstanding (DSO):
- There was some fluctuation in DSO over the years, but overall, it seems relatively stable.
- The company took an average of 40.99 days to collect its receivables in 2024, which is slightly higher than in 2023 but lower than in 2022.
3. Number of Days of Payables:
- The trend in days of payables indicates an increase in the time taken to pay suppliers.
- In 2024, the company took an average of 471.14 days to pay its suppliers, which is higher compared to the previous years.
Overall, looking at these activity ratios collectively, Advanced Drainage Systems Inc seems to have improved its inventory management efficiency, maintained relative stability in collecting receivables, but increased the time taken to pay its suppliers. These ratios suggest that while there have been some improvements, there may be opportunities to further optimize working capital management practices.
Long-term
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.61 | 4.19 | 4.47 | 3.92 | 3.39 |
| Total asset turnover | 0.88 | 1.06 | 1.04 | 0.82 | 0.69 |
The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. From 2020 to 2024, Advanced Drainage Systems Inc's fixed asset turnover ratio exhibited an increasing trend, indicating that the company improved its ability to generate sales from its fixed assets. In the most recent year, the ratio stood at 3.61, implying that for every dollar invested in fixed assets, the company generated $3.61 in revenue.
On the other hand, the total asset turnover ratio reflects the company's overall efficiency in generating sales from all of its assets. Over the same period, Advanced Drainage Systems Inc's total asset turnover ratio also demonstrated an increasing trend, reaching 0.88 in 2024. This suggests that the company was able to generate $0.88 in revenue for every dollar of total assets owned.
Overall, both fixed asset turnover and total asset turnover ratios show an improving trend over the five-year period, indicating enhanced efficiency in asset utilization by Advanced Drainage Systems Inc.