Advanced Drainage Systems Inc (WMS)

Short-term

Turnover ratios

Based on the provided data, we can analyze the activity ratios of Advanced Drainage Systems Inc over the five-year period from March 31, 2021, to March 31, 2025.

1. Inventory Turnover: The inventory turnover ratio indicates how many times a company sells and replaces its inventory in a given period. Advanced Drainage Systems Inc's inventory turnover has fluctuated slightly over the years, ranging from 3.72 to 4.30. A higher turnover ratio generally indicates efficient inventory management.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently a company collects on its credit sales. Advanced Drainage Systems Inc's receivables turnover has shown an increasing trend, from 8.10 to 9.25, indicating an improvement in the company's ability to collect receivables promptly.

3. Payables Turnover: The payables turnover ratio reflects how quickly a company pays its suppliers. Advanced Drainage Systems Inc's payables turnover has varied significantly, with a range from 6.79 to 9.29. A higher turnover ratio suggests that the company is paying its suppliers more quickly.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales revenue. Advanced Drainage Systems Inc's working capital turnover has decreased from 5.76 to 3.14 over the period, indicating a declining efficiency in utilizing its working capital to generate sales.

In summary, Advanced Drainage Systems Inc has shown mixed results in its activity ratios over the past five years. While the company has managed to improve its receivables turnover and maintain a relatively stable inventory turnover, there have been fluctuations in payables turnover and a decline in working capital turnover. Further analysis and comparison with industry benchmarks would provide more insights into the company's operational efficiency.

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Average number of days

Advanced Drainage Systems Inc's inventory management has shown a slight increase in the number of days inventory on hand from 84.98 days in March 2021 to 98.46 days in March 2025. This indicates that the company is taking longer to sell its inventory, which could tie up capital and lead to higher holding costs.

In terms of accounts receivable management, the company has improved its efficiency by reducing the days of sales outstanding from 43.48 days in March 2021 to 39.46 days in March 2025. A lower DSO suggests that the company is collecting receivables faster, which is favorable as it enhances cash flow and reduces the risk of bad debts.

Additionally, Advanced Drainage Systems Inc has experienced fluctuation in its payables management, with the number of days of payables ranging from 39.27 days in March 2023 to 53.72 days in March 2024. A decrease in days of payables indicates that the company is paying its suppliers more quickly, which may strain its working capital position.

Overall, while Advanced Drainage Systems Inc has made progress in managing its accounts receivable efficiently, the company needs to focus on optimizing its inventory turnover and payables cycles to enhance its liquidity and operational performance.

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Long-term

Based on the provided data for Advanced Drainage Systems Inc's long-term activity ratios, we can analyze the following:

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate sales. For Advanced Drainage Systems Inc, the ratio has shown some fluctuation over the years:
- In March 2021, the fixed asset turnover was 3.93, indicating that the company generated $3.93 in sales for every dollar invested in fixed assets.
- By March 2022, the ratio improved to 4.47, suggesting improved efficiency in utilizing fixed assets to generate revenue.
- However, by March 2023, the ratio decreased to 3.92, indicating a slight decline in the efficiency of generating sales from fixed assets.
- The data for March 31, 2024 and 2025 is not available, so we cannot provide specific analysis for those years.

2. Total Asset Turnover:
- The total asset turnover ratio measures how effectively a company is using its total assets to generate revenue. For Advanced Drainage Systems Inc:
- In March 2021, the total asset turnover ratio was 0.82, implying that the company generated $0.82 in sales for every dollar of total assets.
- The ratio improved significantly by March 2022 to 1.05, indicating enhanced efficiency in utilizing total assets to generate revenue.
- By March 2023, the ratio slightly increased to 1.06, showing continued improvement in asset utilization for revenue generation.
- However, there was a decline by March 2024 where the total asset turnover fell to 0.88, suggesting a decrease in the efficiency of generating sales from total assets.
- The data for March 31, 2025 shows a further decline in the total asset turnover to 0.79, which signifies a reduction in the efficiency of using total assets to generate revenue.

In summary, Advanced Drainage Systems Inc's fixed asset turnover has shown some variability over the years, while the total asset turnover initially improved but later declined. Monitoring these ratios can provide insights into the company's efficiency in utilizing both fixed and total assets to drive sales and revenue.