The Clorox Company (CLX)

Short-term

Turnover ratios

The analysis of The Clorox Company’s activity ratios over the period from June 2021 to June 2025 indicates trends in key operational efficiencies.

Inventory Turnover: The ratio demonstrates a consistent upward trajectory, rising from 5.51 in June 2021 to a peak of 7.44 in June 2025. This trend suggests that Clorox has increasingly improved its inventory management efficiency, turning over stock more rapidly; reduced inventory holding periods can enhance liquidity and reduce storage costs.

Receivables Turnover: The receivables turnover ratio shows a decline from 12.15 in June 2021 to 8.65 in June 2025. This decrease indicates a lengthening in the average collection period, implying that it takes more time to collect receivables from customers. The shifting trend warrants attention, as it may impact cash flow and working capital management.

Payables Turnover: The payables turnover ratio has remained relatively stable, fluctuating modestly between 4.39 and 4.75 over the period. This suggests a consistent approach in managing supplier payments and credit terms, without significant changes in payment behavior or credit policies.

Working Capital Turnover: Notably, this ratio was only reported for June 2024, at 147.77, showing high efficiency in generating sales relative to working capital during that period. Its absence in other years limits trend analysis, but the ratio’s high value in 2024 indicates optimized utilization of working capital. The unavailability of this data for other years restricts comprehensive assessment of long-term trends.

Overall, the company exhibits improvements in inventory management and stable supplier payment practices, while receivables collection has become slightly less efficient. The data highlights a focus on inventory control, though attention may be needed to optimize receivables processes to ensure balanced operational efficiency and cash flow management.

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Average number of days

The activity ratios of The Clorox Company, as reflected by the provided data, indicate notable trends over the period from June 2021 to June 2025.

Days of Inventory on Hand (DOH):
The DOH demonstrates a consistent decline from 66.27 days in June 2021 to 49.06 days in June 2025, with an intermediate slight increase to 57.48 days in June 2024. This trend suggests that Clorox has been progressively improving inventory management efficiency, reducing the amount of inventory held relative to sales. The substantial reduction over the four-year span indicates more rapid inventory turnover, which can contribute to improved cash flow and reduced storage costs.

Days of Sales Outstanding (DSO):
The DSO values reveal an increase from 30.03 days in June 2021 to 42.18 days in June 2025. The rising trend indicates a gradual extension in the number of days customers take to settle their accounts receivable. While this may suggest longer collection periods, it is important to consider whether this aligns with industry practices and overall credit policy. An increase in DSO could impact cash flow and liquidity if not carefully managed.

Number of Days of Payables:
The days of payables fluctuate within a narrow range, starting at 81.95 days in June 2021 and decreasing slightly to 78.61 days in June 2025. Throughout this period, Clorox appears to maintain a relatively stable approach to settling payables, generally delaying payments to optimize working capital. The slight decrease in payable days might reflect adjustments in payment policies or supplier negotiations.

Overall Interpretation:
The activity ratios collectively indicate that Clorox has enhanced its inventory turnover efficiency over the analyzed period, reducing inventory holding periods. Conversely, the extension in receivable collection times suggests a trend toward longer customer credit periods, which could have implications for liquidity management. The relatively stable payable days imply a consistent approach to managing liabilities.

These patterns highlight a strategic shift toward optimizing inventory management while potentially accepting longer receivable periods, necessitating careful liquidity oversight to ensure ongoing operational stability.

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Long-term

The Clorox Company’s long-term activity ratios over the specified period demonstrate nuanced shifts in asset utilization efficiency. The fixed asset turnover ratio, which measures the company’s ability to generate sales from its fixed assets, has exhibited some volatility. It decreased from 4.49 in June 2021 to 4.24 in June 2022, reflecting a slight decline in the efficiency of fixed asset utilization. This was followed by a marginal recovery to 4.37 in June 2023, before dipping again to 4.15 in June 2024. A subsequent increase to 4.44 in June 2025 indicates a stabilization and modest improvement in fixed asset productivity.

Conversely, the total asset turnover ratio, which assesses how effectively total assets are employed to generate sales, shows a relatively stable and gradually improving trend. It was 1.16 in June 2021 and exhibited minimal fluctuation at 1.15 in June 2022, suggesting consistent overall asset utilization. The ratio then increased to 1.24 in June 2023 and maintained a similar level of 1.23 in June 2024. By June 2025, the ratio slightly rose to 1.28, signifying incremental enhancements in the overall efficiency of asset deployment.

Overall, these ratios suggest that while fixed asset efficiency experienced some fluctuations, the company’s ability to leverage its total assets for sales has steadily improved over time. The gradual upward trend in total asset turnover indicates ongoing operational efficiencies and potentially improved management of asset resources. However, the variability in fixed asset turnover warrants attention, as it may reflect changes in capital investment, asset utilization strategies, or operational adjustments during the period.