Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Builders FirstSource Inc., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of investment activity ratios from 2018 to 2022 reveals a divergence between the efficiency of fixed asset utilization and the overall efficiency of the company's broader asset and equity bases. While fixed asset productivity has strengthened, total asset and equity turnover ratios have experienced a general decline, indicating a significant expansion of the balance sheet relative to revenue growth.
- Net Fixed Asset Turnover
- A positive trajectory is observed in net fixed asset turnover, which rose from 11.53 in 2018 to 14.50 by 2022. Despite a brief contraction in 2019, the ratio improved consistently thereafter, suggesting an increased ability to generate sales from owned fixed assets.
- Net Fixed Asset Turnover including Operating Leases
- The inclusion of right-of-use assets results in a lower turnover ratio, which dropped sharply from 11.53 in 2018 to 7.18 in 2019 before recovering to 11.07 in 2022. The gap between this metric and the standard net fixed asset turnover highlights the material impact of leased assets on the company's asset base.
- Total Asset Turnover
- A downward trend is evident in total asset turnover, which declined from 2.63 in 2018 to a low of 1.86 in 2021, before slightly recovering to 2.14 in 2022. This suggests that the growth in total assets has outpaced the growth in revenue over the five-year period, leading to reduced overall asset productivity.
- Equity Turnover
- The most significant decline is observed in equity turnover, which fell precipitously from 12.95 in 2018 to 4.14 in 2021, with a minor increase to 4.58 in 2022. This steep reduction indicates a substantial increase in the equity base relative to the volume of sales, implying that the company is operating with a much larger capital cushion or has retained significant earnings that have not yet translated into proportional revenue increases.
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Net Fixed Asset Turnover
Builders FirstSource Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 22,726,418) | 19,893,856) | 8,558,874) | 7,280,431) | 7,724,771) | |
| Property, plant and equipment, net | 1,567,631) | 1,385,441) | 749,130) | 721,887) | 670,075) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 14.50 | 14.36 | 11.43 | 10.09 | 11.53 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Boeing Co. | 6.31 | 5.70 | — | — | — | |
| Caterpillar Inc. | 4.70 | 3.99 | — | — | — | |
| Eaton Corp. plc | 6.59 | 6.41 | — | — | — | |
| GE Aerospace | 5.96 | 5.47 | — | — | — | |
| Honeywell International Inc. | 6.48 | 6.18 | — | — | — | |
| Lockheed Martin Corp. | 8.27 | 8.83 | — | — | — | |
| RTX Corp. | 4.42 | 4.30 | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Capital Goods | 5.79 | 5.46 | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Industrials | 2.94 | 2.72 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 22,726,418 ÷ 1,567,631 = 14.50
2 Click competitor name to see calculations.
An analysis of long-term activity ratios indicates a substantial improvement in the efficiency of fixed asset utilization between 2018 and 2022. While the period began with relative stability, a significant acceleration in revenue generation relative to the growth of property, plant, and equipment occurred starting in 2021, leading to an overall increase in asset productivity.
- Revenue Expansion
- Net sales exhibited a dramatic upward trajectory, increasing from 7.72 billion US dollars in 2018 to 22.73 billion US dollars in 2022. A critical inflection point is observed between 2020 and 2021, where net sales surged from 8.56 billion to 19.89 billion US dollars, representing a growth of approximately 132% in a single fiscal year.
- Fixed Asset Investment
- Net property, plant, and equipment grew from 670.08 million US dollars in 2018 to 1.57 billion US dollars in 2022. The most significant capital expansion occurred in 2021, where the net value of fixed assets nearly doubled from 749.13 million to 1.39 billion US dollars, suggesting a substantial investment in operational capacity to support scaled growth.
- Net Fixed Asset Turnover Efficiency
- The net fixed asset turnover ratio fluctuated in the early period, dipping to 10.09 in 2019 before recovering to 11.43 in 2020. A sharp increase to 14.36 is observed in 2021, peaking at 14.50 in 2022. This trend indicates that for every dollar invested in net fixed assets, the company generated significantly more revenue by the end of the period than at the beginning, demonstrating enhanced operational leverage and asset efficiency.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Builders FirstSource Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 22,726,418) | 19,893,856) | 8,558,874) | 7,280,431) | 7,724,771) | |
| Property, plant and equipment, net | 1,567,631) | 1,385,441) | 749,130) | 721,887) | 670,075) | |
| Operating lease right-of-use assets, net | 485,704) | 457,833) | 274,562) | 292,684) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 2,053,335) | 1,843,274) | 1,023,692) | 1,014,571) | 670,075) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 11.07 | 10.79 | 8.36 | 7.18 | 11.53 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Boeing Co. | 5.55 | 5.04 | — | — | — | |
| Caterpillar Inc. | 4.49 | 3.79 | — | — | — | |
| Eaton Corp. plc | 5.58 | 5.60 | — | — | — | |
| GE Aerospace | 5.08 | 4.55 | — | — | — | |
| Honeywell International Inc. | 5.58 | 5.28 | — | — | — | |
| Lockheed Martin Corp. | 7.27 | 7.54 | — | — | — | |
| RTX Corp. | 3.95 | 3.80 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Capital Goods | 5.13 | 4.80 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Industrials | 2.54 | 2.34 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 22,726,418 ÷ 2,053,335 = 11.07
2 Click competitor name to see calculations.
The analysis of investment activity reveals a period of volatility followed by a sustained recovery in asset utilization efficiency. Between 2018 and 2022, the company experienced substantial growth in both revenue and its fixed asset base, with the efficiency of these assets fluctuating in response to the scale of expansion.
- Net Sales Growth and Scale
- Net sales exhibited moderate fluctuations between 2018 and 2020, followed by an aggressive expansion starting in 2021. Revenue increased from approximately $7.7 billion in 2018 to over $22.7 billion by 2022, representing a nearly threefold increase over the five-year period.
- Fixed Asset Investment
- Property, plant, and equipment, including right-of-use assets, increased consistently from $670 million in 2018 to $2.05 billion in 2022. A notable acceleration occurred between 2020 and 2021, where the asset base nearly doubled, indicating significant capital expenditure or the acquisition of leasehold interests to support expanding operations.
- Net Fixed Asset Turnover Trends
- The turnover ratio declined sharply from 11.53 in 2018 to 7.18 in 2019, reflecting a period where asset growth outpaced revenue generation. However, a consistent upward trajectory followed, with the ratio climbing to 8.36 in 2020, 10.79 in 2021, and 11.07 in 2022. This recovery suggests that the company successfully leveraged its expanded asset base to drive disproportionately higher sales volume.
The return of the turnover ratio to levels near the 2018 baseline, despite a significantly larger absolute asset base, indicates high operational scalability and an improved capacity to generate revenue from long-term investments.
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Total Asset Turnover
Builders FirstSource Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 22,726,418) | 19,893,856) | 8,558,874) | 7,280,431) | 7,724,771) | |
| Total assets | 10,595,160) | 10,714,343) | 4,173,671) | 3,249,490) | 2,932,309) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 2.14 | 1.86 | 2.05 | 2.24 | 2.63 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Boeing Co. | 0.49 | 0.45 | — | — | — | |
| Caterpillar Inc. | 0.69 | 0.58 | — | — | — | |
| Eaton Corp. plc | 0.59 | 0.58 | — | — | — | |
| GE Aerospace | 0.39 | 0.36 | — | — | — | |
| Honeywell International Inc. | 0.57 | 0.53 | — | — | — | |
| Lockheed Martin Corp. | 1.25 | 1.32 | — | — | — | |
| RTX Corp. | 0.42 | 0.40 | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Capital Goods | 0.54 | 0.50 | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Industrials | 0.66 | 0.58 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Net sales ÷ Total assets
= 22,726,418 ÷ 10,595,160 = 2.14
2 Click competitor name to see calculations.
Between 2018 and 2022, the company experienced a substantial expansion in scale, characterized by a significant increase in both net sales and total assets, although the efficiency of asset utilization followed a non-linear trajectory.
- Revenue and Asset Expansion
- Net sales grew from 7.7 billion US$ in 2018 to 22.7 billion US$ in 2022. The most aggressive growth occurred between 2020 and 2021, during which revenue more than doubled. Parallel to this, total assets increased from 2.9 billion US$ in 2018 to a peak of 10.7 billion US$ in 2021, before contracting slightly to 10.6 billion US$ in 2022.
- Asset Turnover Decline (2018–2021)
- A consistent downward trend in the total asset turnover ratio was observed from 2018 to 2021, falling from 2.63 to 1.86. This decline indicates that during this four-year period, the expansion of the asset base occurred at a faster rate than the corresponding growth in net sales, resulting in a temporary reduction in asset productivity.
- Efficiency Recovery (2022)
- The total asset turnover ratio rebounded to 2.14 in 2022. This improvement is the result of a divergence in trends: net sales continued to climb while total assets experienced a slight decrease. This shift suggests an increase in the efficiency with which the company leveraged its existing asset base to generate revenue.
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Equity Turnover
Builders FirstSource Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 22,726,418) | 19,893,856) | 8,558,874) | 7,280,431) | 7,724,771) | |
| Stockholders’ equity | 4,962,566) | 4,802,481) | 1,152,783) | 824,953) | 596,338) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 4.58 | 4.14 | 7.42 | 8.83 | 12.95 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 3.57 | 2.92 | — | — | — | |
| Eaton Corp. plc | 1.22 | 1.20 | — | — | — | |
| GE Aerospace | 2.02 | 1.76 | — | — | — | |
| Honeywell International Inc. | 2.12 | 1.85 | — | — | — | |
| Lockheed Martin Corp. | 7.12 | 6.12 | — | — | — | |
| RTX Corp. | 0.92 | 0.88 | — | — | — | |
| Equity Turnover, Sector | ||||||
| Capital Goods | 2.54 | 2.28 | — | — | — | |
| Equity Turnover, Industry | ||||||
| Industrials | 3.06 | 2.63 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Net sales ÷ Stockholders’ equity
= 22,726,418 ÷ 4,962,566 = 4.58
2 Click competitor name to see calculations.
Between 2018 and 2022, a significant transformation occurred in the relationship between revenue generation and the equity base. While net sales experienced substantial growth, particularly in the latter half of the period, the stockholders' equity expanded at a rate that outpaced sales growth, resulting in a sustained decline in equity turnover until a slight reversal in 2022.
- Net Sales Trajectory
- Revenue remained relatively stable between 2018 and 2020, fluctuating between 7.28 billion and 8.56 billion US dollars. A period of rapid acceleration began in 2021, where sales jumped to 19.89 billion US dollars, continuing upward to reach 22.73 billion US dollars by the end of 2022. This represents a nearly threefold increase in total sales over the five-year window.
- Equity Capitalization
- Stockholders' equity grew consistently from 596.34 million US dollars in 2018 to 1.15 billion US dollars in 2020. A sharp increase occurred in 2021, with equity rising to 4.80 billion US dollars, and further increasing to 4.96 billion US dollars in 2022. The magnitude of equity growth between 2020 and 2021 was particularly pronounced, increasing by approximately 316% in a single year.
- Equity Turnover Performance
- The equity turnover ratio exhibited a strong downward trend for the majority of the period, falling from 12.95 in 2018 to a low of 4.14 in 2021. This decline indicates that for every dollar of equity, the company generated progressively fewer dollars in sales, reflecting a more capital-intensive structure or a significant infusion of equity that had not yet been fully leveraged to drive proportional sales growth. However, in 2022, the ratio saw a modest recovery to 4.58, suggesting that sales growth began to outpace the growth of the equity base once again.
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