CleanSpark Inc (CLSK)

Short-term

Turnover ratios

The activity ratios of CleanSpark Inc. from September 30, 2020, to September 30, 2024, reveal significant fluctuations and evolving operational efficiency over this period.

Inventory Turnover:
The inventory turnover ratio exhibits a marked increase from 31.89 in 2020 to a peak of 380.34 in 2022, indicating a period of enhanced inventory management and more rapid inventory movement. However, there is a subsequent decline to 172.18 in 2023 and a lack of available data for 2024. The high turnover in 2022 suggests efficient inventory utilization, but the notable decline afterward could imply inventory buildup, changes in sales pace, or inventory management adjustments.

Receivables Turnover:
Receivables turnover shows extreme variability, rising dramatically from 11.61 in 2020 to 127.97 in 2021, and then surging further to 4,871.30 in 2022. In 2023, it reaches an exceptionally high of 33,681.60, before dramatically falling to 2.73 in 2024. These fluctuations suggest periods of rapid receivable collections or potential accounting anomalies. The extraordinarily high figures in 2022 and 2023 may reflect extraordinary events or changes in credit policy, while the sharp decrease in 2024 indicates a substantial decline in receivables collection efficiency or possible changes in revenue recognition.

Payables Turnover:
Payables turnover ratio demonstrates relative stability, with values ranging from 1.75 in 2020 to 3.79 in 2021, and maintaining levels around 3.33 to 3.49 in 2022 and 2023. A decline to 1.99 in 2024 suggests a possible slowdown in the company's ability to settle its payables or an extension of payment terms, potentially impacting supplier relationships or reflecting liquidity considerations.

Working Capital Turnover:
The working capital turnover ratios fluctuate significantly, with 3.50 in 2020, decreasing sharply to 0.82 in 2021, then rising to 7.86 in 2022, before declining again to 5.99 in 2023, and dropping to 0.73 in 2024. The high ratio in 2022 indicates highly efficient utilization of working capital during that year, while the low figure in 2021 and 2024 may indicate overextension or less efficient management of short-term assets relative to sales or revenue levels.

Overall, the activity ratios reflect periods of operational efficiency peaks, particularly in 2022, alongside periods of dramatic fluctuations suggesting structural or operational adjustments. The extreme changes, especially in receivables turnover, warrant deeper investigation into accounting practices or extraordinary business events during those years.

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Average number of days

The activity ratios for CleanSpark Inc. over the specified periods reveal notable trends and shifts in inventory management, receivables collection, and payable practices.

Starting with the Days of Inventory on Hand (DOH), there is a marked decline from 11.45 days in September 2020 to 1.10 days in September 2021. The ratio further decreased slightly to 0.96 days in September 2022, indicating a substantial improvement in inventory turnover or possibly inventory reduction strategies during this period. In September 2023, DOH increased modestly to 2.12 days, suggesting a slight accumulation or a strategic shift in inventory holding periods. The data for September 2024 is unavailable, so further trend analysis for that year cannot be performed.

Examining the Days of Sales Outstanding (DSO), the period from September 2020 to 2022 shows a drastic reduction from 31.44 days to only 0.07 days, reflecting an extraordinary efficiency in receivables collection or a possible change in credit policy or revenue recognition practices. In September 2023, DSO further decreased sharply to 0.01 days, implying extremely rapid collection or potentially a change in the accounting or revenue timing. However, in September 2024, DSO increased significantly to 133.63 days, indicating a major slowdown in receivables collection or a change in credit terms, which could impact liquidity and cash flow.

Looking at the Number of Days of Payables, the ratio decreased from 208.95 days in September 2020 to 96.38 days in September 2021, then slightly increased to 109.57 days in 2022. The ratio remained relatively stable at 104.55 days in 2023 but then increased sharply to 183.02 days in September 2024. The decreasing trend from 2020 to 2021 suggests an improved efficiency in settling payables or a strategic delay in payments, while the subsequent increase indicates the company is extending payment periods significantly, potentially to preserve cash or manage liquidity.

Summary:
The activity ratios indicate a period of significant operational efficiency improvements from 2020 through 2022, with very short inventory and receivables periods. However, a substantial change occurs in 2024, especially with the DSO increasing considerably and payables extending markedly, potentially signaling changes in operational strategy, liquidity management, or revenue recognition. These shifts warrant closer investigation to understand underlying causes and implications for the company’s working capital management.

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Long-term

The long-term activity ratios for CleanSpark Inc. over the specified periods reflect notable shifts in asset utilization efficiency. The Fixed Asset Turnover ratio experienced a dramatic decline from 63.08 as of September 30, 2020, to a mere 0.29 as of September 30, 2021, indicating a significant reduction in how effectively the company utilized its fixed assets to generate sales during this period. Although there was a slight improvement to 0.35 by September 30, 2022, the ratio remained substantially lower than the 2020 level, suggesting persistent challenges or changes in operational strategy affecting fixed asset efficiency. Data for subsequent periods are not available, which limits assessment of longer-term trends beyond 2022.

The Total Asset Turnover ratio also demonstrated a declining trend, decreasing from 0.45 in September 2020 to 0.12 in September 2021, reflecting a reduction in overall asset efficiency. A modest recovery is seen as the ratio increased to 0.29 in September 2022, but this improvement was not sustained, with the ratio decreasing again to 0.22 by September 2023 and further declining to 0.19 in September 2024. This ongoing downward trend suggests that the company's ability to generate sales from its total asset base has diminished over time, potentially indicating operational challenges, increased asset base without proportionate revenue growth, or strategic shifts that temporarily affected asset utilization.

Overall, the company's long-term activity ratios reveal a marked decline in asset efficiency metrics from 2020 onward. The sharp decrease in the fixed asset turnover ratio points to a substantial change in how fixed assets contribute to sales, while the general decline in total asset turnover indicates broader inefficiencies in asset management or changes in sales performance relative to asset levels. Further information would be necessary to ascertain the underlying causes and the impact of strategic or operational adjustments during this period.