Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Builders FirstSource Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Inventory Turnover
- The inventory turnover ratio shows fluctuations within the periods analyzed. Initially, it remained around 9.7–9.5 in early 2019, with a decline to a low of approximately 5.1 in the first half of 2021, indicating slower inventory movement. Subsequently, there was a recovery, reaching a peak of 10.5 in Q1 2023, followed by a slight decrease to around 8.5 in the latest quarters. This pattern suggests varying efficiency in managing inventory over time, with notable improvement in recent periods.
- Receivables Turnover
- The receivables turnover ratio generally decreased from about 11.8 in early 2019 to a trough near 6.3 in Q1 2021, reflecting slower collection of receivables. After this low point, there was a steady increase, peaking at 15.7 in Q1 2023, indicating improved effectiveness in collecting outstanding receivables. Recent quarters reveal a slight decline but maintain elevated turnover levels compared to earlier years.
- Payables Turnover
- Payables turnover exhibited a declining trend from approximately 13.7 in early 2019 to a low near 7.2 in early 2021, suggesting slower payment of payables. A distinct recovery followed, with turnover reaching an all-time high near 18.7 in Q1 2023, implying accelerated payment practices. The last two quarters display a moderate decline but remain above pre-2021 levels.
- Working Capital Turnover
- The working capital turnover ratio started at about 12 in early 2019 and rose sharply to almost 15 by Q1 2020, demonstrating increased efficiency in using working capital. However, a decrease ensued, bottoming out near 5.5 in early 2021. Subsequent periods show a rebound with peaks around 13.8 in mid-2023 before slightly decreasing to approximately 11.2 by Q3 2023. This indicates variable but generally improving use of working capital over time.
- Average Inventory Processing Period
- The average inventory processing period was relatively stable around 38–41 days through 2019, then increased markedly to around 71 days in early 2021, indicative of slower inventory turnover. After this peak, the period shortened to about 35 days by early 2023, before rising modestly again in recent quarters. This pattern highlights temporary inefficiencies followed by improvements in inventory management speed.
- Average Receivable Collection Period
- The average receivable collection period increased from roughly 31 days in early 2019 to as much as 58 days in Q1 2021, revealing slower collection processes. A marked improvement occurred thereafter, reducing the period to about 23 days by Q1 2023, before mildly increasing to around 34 days more recently. This trend reflects initial collection challenges followed by enhanced collection efficiency.
- Operating Cycle
- The operating cycle lengthened from approximately 69 days in early 2019 to a high near 129 days in Q1 2021, suggesting slower overall conversion of inventory and receivables into cash. The cycle then shortened substantially to about 58 days by early 2023, with a slight extension thereafter. These changes correspond to the variations observed in inventory and receivables periods, demonstrating cyclical liquidity dynamics.
- Average Payables Payment Period
- The average payables payment period increased from around 27 days in early 2019 to a peak of about 51 days in early 2021, indicating extended payment terms or delayed payments. Subsequently, it decreased sharply to about 20 days in early 2023, signifying faster settling of payables, and then slightly increased to low 30s days in the latest quarters. This suggests a shift from lengthening payment terms to accelerated payments over time.
- Cash Conversion Cycle
- The cash conversion cycle remained relatively stable around 40–42 days until early 2020, then expanded significantly to approximately 78–80 days during early 2021, reflecting a considerable slowdown in converting resources into cash. Improvements followed, with the cycle shortening to about 36 days by mid-2023, before a modest increase to around 44 days most recently. This pattern evidences a temporary liquidity strain that has since been mitigated.
Turnover Ratios
Average No. Days
Inventory Turnover
Builders FirstSource Inc., inventory turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cost of sales | 2,953,162) | 2,933,944) | 2,511,914) | 2,872,438) | 3,746,731) | 4,514,112) | 3,848,758) | 3,149,010) | 3,796,138) | 3,993,531) | 3,104,221) | 1,861,572) | 1,724,799) | 1,428,311) | 1,321,608) | 1,287,017) | 1,439,893) | 1,387,367) | 1,189,325) | 1,323,201) | 1,595,686) | 1,593,560) | 1,289,384) | |||||||
| Inventories, net | 1,331,512) | 1,362,250) | 1,336,163) | 1,426,196) | 1,758,881) | 2,065,349) | 2,188,056) | 1,626,244) | 1,616,553) | 2,074,448) | 1,585,612) | 784,527) | 751,149) | 615,142) | 640,048) | 561,255) | 581,543) | 617,527) | 635,499) | 596,896) | 679,471) | 782,757) | 678,790) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Inventory turnover1 | 8.47 | 8.86 | 10.21 | 10.50 | 8.68 | 7.41 | 6.76 | 8.64 | 7.89 | 5.15 | 5.12 | 8.08 | 7.67 | 8.90 | 8.49 | 9.45 | 9.18 | 8.90 | 8.97 | 9.72 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 0.87 | 0.88 | 0.83 | 0.81 | 0.78 | 0.74 | 0.74 | 0.75 | 0.77 | 0.76 | 0.74 | 0.78 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 2.47 | 2.42 | 2.38 | 2.54 | 2.36 | 2.40 | 2.46 | 2.53 | 2.44 | 2.49 | 2.46 | 2.55 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 3.93 | 3.93 | 3.94 | 4.04 | 3.95 | 3.87 | 4.03 | 4.48 | 4.73 | 4.86 | 5.12 | 5.88 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 3.02 | 3.15 | 3.32 | 3.19 | 3.10 | 3.04 | 3.25 | 3.40 | 3.21 | 3.28 | 3.46 | 3.80 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 3.76 | 3.82 | 3.90 | 4.04 | 4.09 | 4.06 | 4.20 | 4.55 | 4.72 | 4.88 | 4.85 | 4.94 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 17.88 | 16.82 | 16.63 | 18.68 | 18.09 | 16.20 | 18.12 | 19.45 | 19.81 | 18.64 | 17.58 | 16.01 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 4.60 | 4.68 | 4.81 | 5.03 | 5.03 | 5.14 | 5.33 | 5.65 | 5.57 | 5.49 | 5.48 | 5.11 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Inventory turnover
= (Cost of salesQ3 2023
+ Cost of salesQ2 2023
+ Cost of salesQ1 2023
+ Cost of salesQ4 2022)
÷ Inventories, net
= (2,953,162 + 2,933,944 + 2,511,914 + 2,872,438)
÷ 1,331,512 = 8.47
2 Click competitor name to see calculations.
The cost of sales exhibits notable fluctuations across the periods analyzed. Initially, from March 2018 to December 2018, the cost of sales remains relatively stable, around the range of approximately 1.28 to 1.6 million US dollars in thousands. Moving into 2019 and early 2020, the cost of sales shows a moderate increase, peaking around 1.86 million US dollars in thousands by December 2020.
Subsequently, starting in March 2021, there is a substantial surge in the cost of sales, reaching its highest levels between March 2021 and June 2022, peaking near 4.5 million US dollars in thousands during mid-2022. However, by the end of 2022 and into 2023, the cost of sales declines significantly, falling back below 3 million US dollars in thousands by March 2023.
The net inventories demonstrate a general upward trend over the time frame, especially notable after 2020. From March 2018 through 2020, inventories oscillate around the 600,000 to 780,000 US dollars in thousands range. There is a sharp increase beginning in early 2021, escalating the inventory levels to over 2 million US dollars in thousands by mid-2022. Following this peak, inventories taper off gradually during 2022 and 2023, stabilizing just above 1.3 million US dollars in thousands by the third quarter of 2023.
The inventory turnover ratio data, available from late 2018 onward, reveals insights about the efficiency of inventory management. The ratio ranges mostly between approximately 5 and 10.5 times during the observed quarters. In 2019, the turnover ratio remains relatively steady around 8.9 to 9.45, indicating consistent inventory movement. In 2020, there is a visible decline in turnover, with values dropping to about 7.67 and 8.08 at times. The ratio drops more conspicuously during early 2021 to values near 5.12, pointing to slower inventory turnover amid the period with rising inventory levels.
From late 2021 onward, the inventory turnover ratio exhibits recovery and improvement, with the ratio rising to about 10.5 in the first quarter of 2023, signaling enhanced inventory efficiency. However, the ratio slightly decreases toward mid to late 2023, settling near 8.47, which still reflects a moderate turnover rate relative to earlier years.
Overall, the data portrays a period of rising operational scale or changes in purchasing and sales processes, with significant increases in both cost of sales and inventory levels in 2021-2022, followed by a normalization trend in 2023. The inventory turnover ratio indicates periods of both efficiency and slowdown in inventory management, correlating with the observed fluctuations in inventory quantities and cost of sales.
Receivables Turnover
Builders FirstSource Inc., receivables turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Net sales | 4,534,264) | 4,528,890) | 3,883,314) | 4,357,565) | 5,761,463) | 6,926,259) | 5,681,131) | 4,634,809) | 5,508,590) | 5,576,682) | 4,173,775) | 2,530,760) | 2,295,450) | 1,945,643) | 1,787,021) | 1,763,573) | 1,981,035) | 1,904,523) | 1,631,300) | 1,815,980) | 2,118,467) | 2,089,888) | 1,700,436) | |||||||
| Accounts receivable, less allowances | 1,618,107) | 1,618,666) | 1,429,939) | 1,448,139) | 1,924,912) | 2,407,841) | 2,290,513) | 1,708,796) | 2,134,269) | 2,174,674) | 1,749,650) | 880,018) | 860,842) | 719,684) | 702,192) | 614,946) | 721,134) | 715,405) | 648,942) | 654,170) | 805,317) | 820,396) | 710,448) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Receivables turnover1 | 10.69 | 11.45 | 14.64 | 15.69 | 11.95 | 9.45 | 9.34 | 11.64 | 8.34 | 6.70 | 6.26 | 9.73 | 9.05 | 10.39 | 10.59 | 11.84 | 10.17 | 10.44 | 11.80 | 11.81 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 24.99 | 24.99 | 24.65 | 26.46 | 22.98 | 20.27 | 25.37 | 23.58 | 27.95 | 24.76 | 23.97 | 29.75 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 6.95 | 6.56 | 6.37 | 6.39 | 6.59 | 6.10 | 5.46 | 5.68 | 5.97 | 5.51 | 5.07 | 5.33 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 5.07 | 5.01 | 5.05 | 5.09 | 5.28 | 5.15 | 5.39 | 5.95 | 5.75 | 5.72 | 5.79 | 6.15 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 4.61 | 4.67 | 5.00 | 4.09 | 4.19 | 4.39 | 4.43 | 4.55 | 4.83 | 4.74 | 4.59 | 4.37 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 4.65 | 4.52 | 4.57 | 4.77 | 4.74 | 4.45 | 4.82 | 5.04 | 4.78 | 4.89 | 4.89 | 4.78 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 28.14 | 19.67 | 25.61 | 26.34 | 26.06 | 18.87 | 26.02 | 34.15 | 29.27 | 25.59 | 29.81 | 33.06 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 6.67 | 7.13 | 6.81 | 7.36 | 7.15 | 6.28 | 7.15 | 6.66 | 6.69 | 6.99 | 6.03 | 6.11 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Receivables turnover
= (Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023
+ Net salesQ4 2022)
÷ Accounts receivable, less allowances
= (4,534,264 + 4,528,890 + 3,883,314 + 4,357,565)
÷ 1,618,107 = 10.69
2 Click competitor name to see calculations.
- Net Sales
- Over the analyzed quarters, net sales exhibited considerable volatility with a notable upward trend starting from early 2020 through mid-2022. Initial values around 1.7 to 2.1 billion USD in 2018 and 2019 fluctuate mildly but remain within a narrow range. A significant increase occurs in 2021 with sales peaking above 5 billion USD, reaching the highest point in the second quarter of 2021 at approximately 5.58 billion USD. Following this peak, the data shows a decline in late 2022 and 2023, with net sales falling back to the range of about 3.9 to 4.5 billion USD in the latest quarters. This suggests a strong recovery and expansion phase followed by a contraction or normalization period.
- Accounts Receivable, Less Allowances
- Accounts receivable showed an overall increasing trend from 2018 to 2023, indicating growing amounts tied up in receivables. Values began near 0.7 billion USD in early 2018, with a gradual increase through 2019. Sharp rises are evident commencing in 2020, paralleling the growth in net sales, peaking in mid-2022 above 2.4 billion USD. A decrease is noted in 2023, dropping back to roughly 1.6 billion USD by the last quarter. This pattern aligns with fluctuating sales volumes and could reflect changes in credit terms or collection efficiency.
- Receivables Turnover Ratio
- The receivables turnover ratio, where data are available, shows variability with an overall downward trend from 2018 through 2021, followed by improvement in subsequent quarters. The ratio declines from about 11.8 in early 2019 to a low near 6.3 in early 2021, indicating slower collection of receivables during that interval. After this period, the ratio recovers, rising above 11 in late 2021 and peaking around 15.7 by March 2023 before slightly decreasing. This reflects improved efficiency in managing receivables and collecting outstanding balances in the most recent periods, despite fluctuations in sales levels.
Payables Turnover
Builders FirstSource Inc., payables turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Cost of sales | 2,953,162) | 2,933,944) | 2,511,914) | 2,872,438) | 3,746,731) | 4,514,112) | 3,848,758) | 3,149,010) | 3,796,138) | 3,993,531) | 3,104,221) | 1,861,572) | 1,724,799) | 1,428,311) | 1,321,608) | 1,287,017) | 1,439,893) | 1,387,367) | 1,189,325) | 1,323,201) | 1,595,686) | 1,593,560) | 1,289,384) | |||||||
| Accounts payable | 1,032,093) | 1,061,965) | 938,938) | 803,479) | 1,087,994) | 1,265,461) | 1,563,334) | 1,093,370) | 1,004,521) | 1,318,446) | 1,123,804) | 600,357) | 651,332) | 554,394) | 551,548) | 436,823) | 499,360) | 516,897) | 471,338) | 423,168) | 487,775) | 562,549) | 488,178) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Payables turnover1 | 10.92 | 11.36 | 14.53 | 18.65 | 14.02 | 12.10 | 9.46 | 12.84 | 12.70 | 8.10 | 7.22 | 10.55 | 8.85 | 9.88 | 9.86 | 12.14 | 10.69 | 10.63 | 12.10 | 13.71 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Payables Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 6.18 | 6.28 | 6.37 | 6.18 | 6.36 | 6.17 | 6.73 | 6.40 | 6.20 | 5.45 | 4.90 | 4.94 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 5.54 | 5.09 | 4.68 | 4.76 | 4.81 | 4.72 | 4.43 | 4.36 | 4.61 | 4.57 | 4.46 | 4.75 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 4.48 | 4.52 | 4.55 | 4.51 | 4.61 | 4.43 | 4.67 | 4.75 | 5.11 | 5.22 | 5.66 | 6.24 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 3.26 | 3.41 | 3.57 | 2.98 | 3.14 | 3.14 | 3.32 | 3.32 | 3.33 | 3.35 | 3.56 | 3.67 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 3.51 | 3.49 | 3.50 | 3.53 | 3.68 | 3.63 | 3.66 | 3.61 | 3.83 | 3.76 | 3.86 | 3.86 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 15.51 | 16.97 | 17.65 | 27.25 | 21.48 | 24.07 | 21.92 | 74.34 | 37.83 | 36.15 | 30.31 | 64.48 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 5.37 | 5.54 | 5.42 | 5.40 | 5.82 | 5.36 | 6.28 | 5.93 | 6.06 | 6.52 | 5.67 | 5.56 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Payables turnover
= (Cost of salesQ3 2023
+ Cost of salesQ2 2023
+ Cost of salesQ1 2023
+ Cost of salesQ4 2022)
÷ Accounts payable
= (2,953,162 + 2,933,944 + 2,511,914 + 2,872,438)
÷ 1,032,093 = 10.92
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the cost of sales, accounts payable, and payables turnover ratio over the reviewed periods.
- Cost of Sales
- The cost of sales exhibits fluctuations with periods of growth and decline. Initially, the values were relatively stable, ranging from approximately 1,189,325 to 1,596,860 (thousands of US dollars) between early 2018 and early 2020. A significant increase is observed starting in the first quarter of 2021, reaching a peak in the second quarter of 2021 at about 3,993,531. Following this peak, the amount decreases somewhat but remains elevated compared to previous years, showing volatility in the later quarters through 2023, with a range between approximately 2,512,914 and 3,746,731.
- Accounts Payable
- Accounts payable reflects a general upward trend over the same time period. Starting at approximately 423,168 (thousands of US dollars) at the end of 2018, the figure increases notably, hitting a high point near 1,568,334 in the first quarter of 2022. After this surge, a decline occurs, dropping to approximately 803,479 in the first quarter of 2023, before slightly increasing again to around 1,031,093 by the third quarter of 2023. This pattern suggests periods of increased obligations possibly linked to inventory or cost management, followed by partial reductions.
- Payables Turnover Ratio
- The payables turnover ratio, representing the frequency at which payables are paid off during a period, demonstrates considerable variability. Early data show a decrease from 13.71 in March 2018 to as low as 7.22 in March 2021, indicating a slower pace in payable settlements during this time. However, this ratio rebounds sharply to a peak of 18.65 in March 2023, suggesting a significant acceleration in payment processing. The latter part of the timeline shows fluctuating dynamics in turnover rates, possibly reflecting changes in credit terms, payment policies, or working capital management strategies.
Overall, the observed data reflect a dynamic environment with pronounced shifts in cost structure and payable management. The substantial rise in cost of sales starting in 2021 paired with increasing accounts payable suggests increased purchasing or inventory levels. The variable payables turnover ratio highlights changes in the timing of payment to suppliers, which may indicate strategic adjustments in cash flow management. These trends invite further inquiry into the underlying operational and market factors influencing these financial metrics.
Working Capital Turnover
Builders FirstSource Inc., working capital turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||
| Current assets | 3,574,107) | 3,605,217) | 3,347,289) | 3,497,647) | 4,420,131) | 5,277,316) | 5,379,933) | 3,968,269) | 4,231,234) | 4,915,075) | 3,570,668) | 2,223,682) | 2,061,742) | 1,801,587) | 1,604,881) | 1,306,867) | 1,430,077) | 1,433,958) | 1,385,754) | 1,373,751) | 1,613,974) | 1,726,952) | 1,503,115) | |||||||
| Less: Current liabilities | 2,026,682) | 1,955,856) | 1,831,931) | 1,842,779) | 2,293,727) | 2,528,813) | 2,683,067) | 2,128,711) | 2,033,180) | 2,252,748) | 1,861,178) | 1,074,853) | 1,084,871) | 933,106) | 859,013) | 821,301) | 863,745) | 848,219) | 737,911) | 731,259) | 771,762) | 846,750) | 719,391) | |||||||
| Working capital | 1,547,425) | 1,649,361) | 1,515,358) | 1,654,868) | 2,126,404) | 2,748,503) | 2,696,866) | 1,839,558) | 2,198,054) | 2,662,327) | 1,709,490) | 1,148,829) | 976,871) | 868,481) | 745,868) | 485,566) | 566,332) | 585,739) | 647,843) | 642,492) | 842,212) | 880,202) | 783,724) | |||||||
| Net sales | 4,534,264) | 4,528,890) | 3,883,314) | 4,357,565) | 5,761,463) | 6,926,259) | 5,681,131) | 4,634,809) | 5,508,590) | 5,576,682) | 4,173,775) | 2,530,760) | 2,295,450) | 1,945,643) | 1,787,021) | 1,763,573) | 1,981,035) | 1,904,523) | 1,631,300) | 1,815,980) | 2,118,467) | 2,089,888) | 1,700,436) | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Working capital turnover1 | 11.18 | 11.24 | 13.81 | 13.73 | 10.82 | 8.28 | 7.94 | 10.81 | 8.09 | 5.48 | 6.40 | 7.45 | 7.98 | 8.61 | 9.97 | 14.99 | 12.95 | 12.75 | 11.82 | 12.02 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 5.46 | 4.80 | 4.61 | 3.42 | 3.13 | 2.87 | 2.51 | 2.34 | 2.02 | 2.00 | 1.88 | 1.69 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 4.27 | 5.29 | 4.25 | 4.62 | 4.35 | 3.93 | 3.83 | 3.54 | 2.87 | 2.80 | 2.52 | 2.84 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 6.61 | 6.16 | 7.01 | 8.70 | 10.69 | — | — | 65.65 | 12.41 | 21.65 | 5.34 | 5.42 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 8.11 | 5.70 | 5.87 | 7.93 | 13.29 | 10.55 | 7.14 | 4.94 | 1.57 | 1.57 | 1.27 | 2.26 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 5.98 | 5.16 | 7.79 | 7.03 | 7.91 | 8.84 | 8.07 | 5.86 | 5.94 | 4.52 | 4.27 | 3.64 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 11.04 | 10.56 | 12.81 | 12.93 | 14.03 | 14.28 | 15.14 | 11.52 | 10.48 | 12.30 | 11.93 | 12.01 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 44.25 | 16.99 | 12.76 | 20.15 | 19.15 | 17.77 | 11.41 | 9.75 | 8.11 | 10.24 | 9.77 | 7.52 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Working capital turnover
= (Net salesQ3 2023
+ Net salesQ2 2023
+ Net salesQ1 2023
+ Net salesQ4 2022)
÷ Working capital
= (4,534,264 + 4,528,890 + 3,883,314 + 4,357,565)
÷ 1,547,425 = 11.18
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends in the company’s liquidity, sales performance, and operational efficiency over the analyzed periods.
- Working Capital
- The working capital generally exhibits a pattern of growth with fluctuations across quarters. From March 2018 to December 2018, there was a decline from 783,724 thousand USD to 642,492 thousand USD, followed by a period of stability and slight decrease through 2019. A notable upward trend begins in 2020, continuing strongly into 2021, peaking at 2,662,327 thousand USD by June 2021. After this peak, working capital declined gradually but remained elevated relative to 2018 and 2019 levels, ending around 1,547,425 thousand USD in September 2023. This upward movement suggests increased liquidity and possibly higher current assets relative to current liabilities in recent years.
- Net Sales
- Net sales demonstrate a clear overall growth trend despite some variability. The values increased modestly from 1,700,436 thousand USD in March 2018 to approximately 1,813,980 thousand USD by December 2018. Thereafter, minor fluctuations occurred in 2019, with net sales recovering from a dip in March 2019 to a higher level in September 2019. A substantial jump is visible from 2020 onwards, culminating in peak sales of over 5.7 million thousand USD by June and September 2022. However, the most recent periods show a decline in sales, with values dropping to around 4.5 million thousand USD by September 2023. This rise and subsequent moderation indicate strong growth phases potentially driven by market demand, followed by a cooling-off period or market adjustments.
- Working Capital Turnover
- Working capital turnover ratios, available from March 2019 onward, reflect efficiency in using working capital to generate sales. The ratios were high in early 2019—above 12 times—indicating effective utilization despite lower absolute sales. Through 2020 and 2021, turnover sharply declined, falling to around 5.48 times in September 2021. This decline occurred alongside rising working capital and sales, suggesting accumulation of current assets relative to sales. Subsequently, the ratio picked up again in late 2021, peaking at 13.81 times in June 2023, pointing to improved efficiency. The closing ratio remains strong at around 11.18 times in September 2023, indicating a rebound in operational efficiency.
Overall, the data depicts a company that experienced expansion in its liquidity base and sales volume, particularly through the 2020-2022 periods, likely reflecting growth opportunities seized during those years. The working capital turnover trends imply shifts in operational management, where periods of lower turnover correspond to larger working capital investments, potentially for inventory or receivables build-up. The recent improvement in turnover suggests a renewed focus on capital efficiency as sales volumes adjusted downward from peak levels.
Average Inventory Processing Period
Builders FirstSource Inc., average inventory processing period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Inventory turnover | 8.47 | 8.86 | 10.21 | 10.50 | 8.68 | 7.41 | 6.76 | 8.64 | 7.89 | 5.15 | 5.12 | 8.08 | 7.67 | 8.90 | 8.49 | 9.45 | 9.18 | 8.90 | 8.97 | 9.72 | — | — | — | |||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
| Average inventory processing period1 | 43 | 41 | 36 | 35 | 42 | 49 | 54 | 42 | 46 | 71 | 71 | 45 | 48 | 41 | 43 | 39 | 40 | 41 | 41 | 38 | — | — | — | |||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 419 | 416 | 438 | 452 | 468 | 494 | 493 | 486 | 475 | 478 | 496 | 467 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 148 | 151 | 154 | 144 | 155 | 152 | 148 | 144 | 150 | 146 | 149 | 143 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 93 | 93 | 93 | 90 | 92 | 94 | 90 | 82 | 77 | 75 | 71 | 62 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 121 | 116 | 110 | 114 | 118 | 120 | 112 | 107 | 114 | 111 | 105 | 96 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 97 | 96 | 94 | 90 | 89 | 90 | 87 | 80 | 77 | 75 | 75 | 74 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 20 | 22 | 22 | 20 | 20 | 23 | 20 | 19 | 18 | 20 | 21 | 23 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 79 | 78 | 76 | 73 | 73 | 71 | 69 | 65 | 65 | 66 | 67 | 71 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 8.47 = 43
2 Click competitor name to see calculations.
The data demonstrates notable fluctuations and evolving trends in both inventory turnover and average inventory processing period over the observed quarters.
- Inventory Turnover
-
Starting from the first available data point in March 2019 with a ratio of 9.72, the inventory turnover shows a declining trend through 2019 and 2020, reaching a low of 5.12 in March 2021. This decline suggests a slowdown in how frequently inventory is sold and replenished within a year.
Following this dip, there is a recovery beginning mid-2021, where turnover ratios increase again, peaking at 10.5 in March 2023. This peak surpasses earlier values, indicating improved efficiency in selling inventory relative to previous years.
However, toward the last quarters recorded, a slight reduction is noticeable, with turnover decreasing to 8.47 by September 2023, though remaining higher than the lows experienced in early 2021.
- Average Inventory Processing Period
-
The average inventory processing period inversely mirrors the turnover trend, starting at 38 days in March 2019, increasing gradually to worsen inventory holding times, peaking at 71 days in both March and June 2021. These longer durations imply inventory remains on hand for longer periods, coinciding with the reduction in turnover ratio.
Post mid-2021, there is a downward trend in processing time, reducing to a low of 35 days in March 2023, consistent with the simultaneous increase in inventory turnover.
Similar to turnover, a modest increase appears at the end of the series with processing periods extending again to 43 days by September 2023.
In summary, the period from early 2019 through early 2021 marks a phase of declining inventory efficiency, as indicated by decreasing turnover and increasing processing periods. This trend reverses starting mid-2021, with improvements in inventory velocity and shorter processing times, peaking in early 2023. Minor reversals occur in the latest quarters, suggesting potential challenges or changes affecting inventory management efficiency.
Average Receivable Collection Period
Builders FirstSource Inc., average receivable collection period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Receivables turnover | 10.69 | 11.45 | 14.64 | 15.69 | 11.95 | 9.45 | 9.34 | 11.64 | 8.34 | 6.70 | 6.26 | 9.73 | 9.05 | 10.39 | 10.59 | 11.84 | 10.17 | 10.44 | 11.80 | 11.81 | — | — | — | |||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
| Average receivable collection period1 | 34 | 32 | 25 | 23 | 31 | 39 | 39 | 31 | 44 | 54 | 58 | 38 | 40 | 35 | 34 | 31 | 36 | 35 | 31 | 31 | — | — | — | |||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 15 | 15 | 15 | 14 | 16 | 18 | 14 | 15 | 13 | 15 | 15 | 12 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 53 | 56 | 57 | 57 | 55 | 60 | 67 | 64 | 61 | 66 | 72 | 68 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 72 | 73 | 72 | 72 | 69 | 71 | 68 | 61 | 63 | 64 | 63 | 59 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 79 | 78 | 73 | 89 | 87 | 83 | 82 | 80 | 76 | 77 | 80 | 83 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 79 | 81 | 80 | 77 | 77 | 82 | 76 | 72 | 76 | 75 | 75 | 76 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 13 | 19 | 14 | 14 | 14 | 19 | 14 | 11 | 12 | 14 | 12 | 11 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 55 | 51 | 54 | 50 | 51 | 58 | 51 | 55 | 55 | 52 | 61 | 60 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 10.69 = 34
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio shows variability across the observed periods, with notable fluctuations between quarters. Starting from the earliest available data in March 2018 after an initial gap, the ratio was around 11.81 and remained relatively stable in 2018 and early 2019, staying above 10. This suggests a consistent level of efficiency in collecting receivables during this initial timeframe.
- In late 2019 and through 2020, the trend indicates a gradual decline in turnover, dropping from 11.84 to a low of 9.05 in December 2020. This decline points to a slower collection process or an increase in receivables outstanding, potentially signaling challenges in accounts receivable management or changes in credit terms during this period.
- During 2021, the ratio further decreased significantly to 6.26 in March and June, improving slightly to 8.34 and 11.64 in the subsequent quarters. This dip could reflect an impact from external events affecting the company's ability to collect receivables efficiently.
- From 2022 onwards, the turnover ratio improves markedly, reaching peaks above 11 and even 15.69 in March 2023. This recovery suggests enhanced effectiveness in managing receivables or a tightening of credit policies contributing to faster collections. However, towards the end of the observed period, the ratio declines slightly again but remains above 10, signaling a stable but cautious receivables management approach.
- Average Receivable Collection Period
- The average collection period data complements the turnover ratio, revealing inversely correlated trends as expected. Early data from 2018 and 2019 show collection periods around 31 to 36 days, indicating consistent time frames for converting receivables to cash.
- From late 2019 through 2020, the collection period gradually increased from roughly 31 days up to 40 days, which aligns with the declining turnover ratio and suggests slower receivables conversion during this period.
- A significant spike occurs in 2021, with the collection period reaching 58 days in March and 54 days in June, indicating near-doubling of the time it takes to collect receivables compared to earlier periods. This suggests major collection difficulties or extended payment terms during this time.
- Subsequent quarters in 2021 reveal some improvement, reducing collection days to the mid-40s and eventually back to 31 days by December. In 2022 and early 2023, the period stabilizes around the lower 30-day range, reaching a low of 23 days in March 2023. This reduction indicates improved efficiency and faster cash conversion cycles consistent with the rising receivables turnover ratio in the same period.
- The latter part of 2023 shows a slight increase in collection days up to 34, suggesting a minor easing in receivables efficiency but still within a generally healthy range compared to prior years.
- Summary Insights
- The data reveals a cyclical pattern in receivables management, with periods of robust efficiency followed by intervals of prolonged collection times. The downturn in 2020-2021 likely reflects external pressures impacting receivables, while the subsequent improvement suggests adaptive measures or market recovery. Overall, the trend toward enhanced receivable turnover and shortened collection periods in 2022-2023 indicates stronger operational management of credit and collections, contributing positively to the company's liquidity and cash flow stability.
Operating Cycle
Builders FirstSource Inc., operating cycle calculation (quarterly data)
No. days
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Average inventory processing period | 43 | 41 | 36 | 35 | 42 | 49 | 54 | 42 | 46 | 71 | 71 | 45 | 48 | 41 | 43 | 39 | 40 | 41 | 41 | 38 | — | — | — | |||||||
| Average receivable collection period | 34 | 32 | 25 | 23 | 31 | 39 | 39 | 31 | 44 | 54 | 58 | 38 | 40 | 35 | 34 | 31 | 36 | 35 | 31 | 31 | — | — | — | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Operating cycle1 | 77 | 73 | 61 | 58 | 73 | 88 | 93 | 73 | 90 | 125 | 129 | 83 | 88 | 76 | 77 | 70 | 76 | 76 | 72 | 69 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Operating Cycle, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 434 | 431 | 453 | 466 | 484 | 512 | 507 | 501 | 488 | 493 | 511 | 479 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 201 | 207 | 211 | 201 | 210 | 212 | 215 | 208 | 211 | 212 | 221 | 211 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 165 | 166 | 165 | 162 | 161 | 165 | 158 | 143 | 140 | 139 | 134 | 121 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 200 | 194 | 183 | 203 | 205 | 203 | 194 | 187 | 190 | 188 | 185 | 179 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 176 | 177 | 174 | 167 | 166 | 172 | 163 | 152 | 153 | 150 | 150 | 150 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 33 | 41 | 36 | 34 | 34 | 42 | 34 | 30 | 30 | 34 | 33 | 34 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 134 | 129 | 130 | 123 | 124 | 129 | 120 | 120 | 120 | 118 | 128 | 131 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 43 + 34 = 77
2 Click competitor name to see calculations.
The data reveals several key trends in the company's operational efficiency over the analyzed periods.
- Average Inventory Processing Period
- This metric remained relatively stable around the high 30s to low 40s in days from March 2019 to December 2019. Starting in March 2020, a gradual increase is observable, peaking significantly in June and September 2021 at 71 days. This suggests a slower turnover of inventory during that time. Following this peak, the inventory processing days decreased notably by December 2021, stabilizing in the 40s through 2023, with minor fluctuations between 35 and 43 days. This pattern indicates an initial buildup or slower movement of inventory, followed by an improvement toward more efficient inventory management.
- Average Receivable Collection Period
- The average time to collect receivables showed moderate stability around the low to mid-30 days range from March 2019 through December 2019. Starting in March 2020, there was an increase reaching a peak in June 2021 at 58 days, indicating slower collections during that period which may reflect external or internal challenges in accounts receivable management. Post-June 2021, the collection period generally declined, reaching the twenties by March and June 2023, implying enhanced effectiveness in receivables management or improved customer payment behavior.
- Operating Cycle
- The operating cycle, which combines the inventory processing and receivable collection periods, remained relatively stable around the mid-70 days mark until the end of 2019. Beginning in 2020, the operating cycle lengthened noticeably, peaking at 129 days in March 2021 and maintaining elevated levels through June 2021 at 125 days. This extended operating cycle suggests increased cash conversion time potentially due to slower inventory turnover and receivables collection. After this period, there was a marked improvement, with the cycle shortening to approximately 73 days by December 2021 and fluctuating moderately between 58 and 77 days in the subsequent quarters through September 2023, showing partial normalization of the cash conversion process.
In summary, the analysis highlights a period of operational stretching between early 2020 and mid-2021, where both inventory turnover and receivables collection slowed considerably, resulting in a prolonged operating cycle. This period was followed by notable recovery and efficiency gains, as reflected in reduced processing and collection periods, driving the operating cycle toward more manageable levels in the last observed periods.
Average Payables Payment Period
Builders FirstSource Inc., average payables payment period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Payables turnover | 10.92 | 11.36 | 14.53 | 18.65 | 14.02 | 12.10 | 9.46 | 12.84 | 12.70 | 8.10 | 7.22 | 10.55 | 8.85 | 9.88 | 9.86 | 12.14 | 10.69 | 10.63 | 12.10 | 13.71 | — | — | — | |||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
| Average payables payment period1 | 33 | 32 | 25 | 20 | 26 | 30 | 39 | 28 | 29 | 45 | 51 | 35 | 41 | 37 | 37 | 30 | 34 | 34 | 30 | 27 | — | — | — | |||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 59 | 58 | 57 | 59 | 57 | 59 | 54 | 57 | 59 | 67 | 74 | 74 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 66 | 72 | 78 | 77 | 76 | 77 | 82 | 84 | 79 | 80 | 82 | 77 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 82 | 81 | 80 | 81 | 79 | 82 | 78 | 77 | 71 | 70 | 65 | 58 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 112 | 107 | 102 | 123 | 116 | 116 | 110 | 110 | 109 | 109 | 103 | 100 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 104 | 105 | 104 | 103 | 99 | 101 | 100 | 101 | 95 | 97 | 95 | 95 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 24 | 22 | 21 | 13 | 17 | 15 | 17 | 5 | 10 | 10 | 12 | 6 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 68 | 66 | 67 | 68 | 63 | 68 | 58 | 62 | 60 | 56 | 64 | 66 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 10.92 = 33
2 Click competitor name to see calculations.
The analysis of the payables turnover ratio over the observed periods reveals a fluctuating but generally increasing trend from 2018 through 2023. Initially, the ratio stood at 13.71 in March 2018 and demonstrated a gradual decline reaching lower values near the range of 8.85 by the end of 2020. From 2021 onwards, there was notable variability with peaks around 14.02 at the end of 2022, followed by a subsequent decrease toward approximately 10.92 by late 2023. This volatility indicates periods of both acceleration and deceleration in the rate at which the company settles its payables.
Correspondingly, the average payables payment period exhibited an inversely related pattern, consistent with the turnover ratio dynamics. The number of days increased progressively from 27 days in early 2018 to a peak of 51 days by the first quarter of 2021, suggesting a lengthening timeframe for payments during that period. After this peak, the payment period shortened significantly to around 20 days by the first half of 2023, before it modestly increased again to the low thirties by the third quarter of 2023.
- Payables Turnover Ratio
- Overall, the ratio shows a cyclical pattern with a long-term increasing tendency, indicating variable management of payables turnover efficiency.
- The dip observed in 2020 reflects slower payables turnover, possibly related to external economic conditions impacting payment cycles.
- Post-2020, fluctuations suggest adaptive changes in payment practices or working capital management strategies responding to evolving business environments.
- Average Payables Payment Period
- The payment period trend inversely mirrors the turnover ratio, with an increasing trend up to early 2021, indicative of an extended time to settle payables.
- Shortening of the payment period in 2022 and early 2023 reflects a quicker settlement pace, potentially aiming to leverage supplier relationships or capture early payment benefits.
- Subsequent slight increases toward late 2023 may represent a balanced approach to cash flow management and vendor negotiations.
In summary, the company's payables management demonstrates responsiveness to internal and external factors over the period analyzed, balancing between optimizing cash flow and maintaining supplier relations. The alternation between longer and shorter payment periods coupled with corresponding turnover ratios suggests strategic adjustments in working capital management practices across different market conditions and fiscal periods.
Cash Conversion Cycle
Builders FirstSource Inc., cash conversion cycle calculation (quarterly data)
No. days
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||||||||
| Average inventory processing period | 43 | 41 | 36 | 35 | 42 | 49 | 54 | 42 | 46 | 71 | 71 | 45 | 48 | 41 | 43 | 39 | 40 | 41 | 41 | 38 | — | — | — | |||||||
| Average receivable collection period | 34 | 32 | 25 | 23 | 31 | 39 | 39 | 31 | 44 | 54 | 58 | 38 | 40 | 35 | 34 | 31 | 36 | 35 | 31 | 31 | — | — | — | |||||||
| Average payables payment period | 33 | 32 | 25 | 20 | 26 | 30 | 39 | 28 | 29 | 45 | 51 | 35 | 41 | 37 | 37 | 30 | 34 | 34 | 30 | 27 | — | — | — | |||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||||||||
| Cash conversion cycle1 | 44 | 41 | 36 | 38 | 47 | 58 | 54 | 45 | 61 | 80 | 78 | 48 | 47 | 39 | 40 | 40 | 42 | 42 | 42 | 42 | — | — | — | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | ||||||||||||||||||||||||||||||
| Boeing Co. | 375 | 373 | 396 | 407 | 427 | 453 | 453 | 444 | 429 | 426 | 437 | 405 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Caterpillar Inc. | 135 | 135 | 133 | 124 | 134 | 135 | 133 | 124 | 132 | 132 | 139 | 134 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Eaton Corp. plc | 83 | 85 | 85 | 81 | 82 | 83 | 80 | 66 | 69 | 69 | 69 | 63 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| GE Aerospace | 88 | 87 | 81 | 80 | 89 | 87 | 84 | 77 | 81 | 79 | 82 | 79 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Honeywell International Inc. | 72 | 72 | 70 | 64 | 67 | 71 | 63 | 51 | 58 | 53 | 55 | 55 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Lockheed Martin Corp. | 9 | 19 | 15 | 21 | 17 | 27 | 17 | 25 | 20 | 24 | 21 | 28 | — | — | — | — | — | — | — | — | — | — | — | |||||||
| RTX Corp. | 66 | 63 | 63 | 55 | 61 | 61 | 62 | 58 | 60 | 62 | 64 | 65 | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 43 + 34 – 33 = 44
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibits a general increase from the end of 2018 through mid-2021, rising from approximately 38-41 days to a peak of around 71 days during the first half of 2021. Following this peak, there is a noticeable decline to the range of 42-54 days by the end of 2022, stabilizing around 35-43 days through the first three quarters of 2023. This pattern indicates a period of lengthening inventory turnover times culminating in mid-2021, succeeded by improved inventory management or faster processing times thereafter.
- Average Receivable Collection Period
- The receivable collection period remains fairly consistent between 31 and 36 days from the first quarter of 2019 until early 2020, followed by a gradual increase to about 40 days by the end of 2020. A marked surge is observed in the first half of 2021, where it peaks at approximately 54-58 days. Subsequently, the collection period decreases sharply back to around 31-39 days in 2022, and further improves to approximately 23-34 days by mid-2023. This suggests a temporary extension in credit collection durations during 2021, with a return to more efficient receivables management in recent periods.
- Average Payables Payment Period
- The payables payment period shows a rising trend from about 27 days at the end of Q1 2019 to a peak of 41-51 days during 2020 and early 2021. Thereafter, the period declines significantly to around 26-30 days from mid-2021 through mid-2023. This indicates an early tendency to extend payment terms during the challenging 2020-2021 timeframe, possibly to manage liquidity, followed by a strategy shift toward quicker payment cycles in subsequent quarters.
- Cash Conversion Cycle
- The cash conversion cycle remains relatively stable around 40-42 days from early 2019 through early 2020, before increasing to approximately 47-48 days at the end of 2020. It then spikes sharply to 78-80 days in the first half of 2021, reflecting extended durations in inventory, receivables, or both. Post-peak, the cycle shortens substantially to the mid-40 day range by the end of 2021 and fluctuates moderately between 36 and 58 days throughout 2022. The cycle evaluation for 2023 shows a further reduction and stabilization near 38-44 days, suggesting improved operational efficiency and cash flow management following the disruption.