The Clorox Company (CLX)

Short-term

Turnover ratios

The activity ratios for The Clorox Company, as reflected in the provided data, exhibit several noteworthy trends and variations over the analyzed periods.

Inventory Turnover:
The inventory turnover ratio demonstrates a declining trend from 8.06 times as of June 30, 2020, to a low of approximately 5.39 in December 2021. Post-2021, the ratio shows a gradual improvement, reaching 6.49 by December 2023 and oscillating around similar levels in 2024, with values such as 6.71 in December 2024 and 6.06 in March 2025. This trajectory indicates that the company's efficiency in managing inventory deteriorated during the initial pandemic period but has since stabilized and slightly improved, suggesting better inventory management or changes in inventory levels.

Receivables Turnover:
The receivables turnover ratio is relatively stable, fluctuating around 10 to 12 times throughout the period. The highest recorded value is 12.44 in December 2021, whereas the lowest is approximately 10.21 in June 2024. The ratio's stability implies consistent collection processes and effective receivables management.

Payables Turnover:
The payables turnover fluctuates significantly. It peaks at 6.36 times in June 2020 and again around 4.75 in June 2022, with notable dips below 3 at several points, exemplified by 2.52 in September 2023 and 1.91 in March 2025. The fluctuating nature suggests variability in how quickly the company pays its suppliers, possibly influenced by shifts in credit terms, supplier negotiations, or cash flow considerations.

Working Capital Turnover:
The working capital turnover ratio presents a complex picture. It starts at 11.16 in June 2020, rising sharply to 20.61 in December 2020. Data for most of 2021 and 2022 is unavailable, but notable values appear at 52.60 in March 2021 and an unusually high 147.77 in June 2024. These elevated figures indicate increased effectiveness in utilizing working capital during these periods. The significant fluctuations may reflect strategic shifts in operational management, changes in current asset and liability balances, or exceptional circumstances affecting liquidity.

Overall Observations:
- The initial decrease in inventory turnover indicates slowed inventory management efficiency during the early pandemic phase, with gradual recovery afterward.
- The receivables turnover remains relatively steady, illustrating consistent credit collection practices.
- Payables turnover variances suggest periods of extended supplier payment terms and instances of quicker payments, pointing to strategic or operational adjustments.
- The fluctuations in working capital turnover suggest periods of heightened operational efficiency or strategic deployment of current assets and liabilities, notably the spike in 2024.

These ratios collectively provide insight into Clorox’s operational efficiency, liquidity management, and strategic priorities over the analyzed periods, highlighting a company adapting to external disruptions and evolving operational conditions.

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Average number of days

The activity ratios for The Clorox Company, as reflected in the provided data, portray notable trends over the analyzed period, specifically focusing on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Days of Payables.

Days of Inventory on Hand (DOH):
The DOH increased steadily from approximately 45.3 days at June 30, 2020, peaking around 67.7 days at the end of 2021. This indicates a lengthening of the inventory holding period during this period, suggesting potential challenges in inventory turnover or strategic inventory accumulation. After reaching the maximum in late 2021, the DOH declined moderately to around 56.3 days by the end of 2024, implying improved inventory management or a response to market conditions. However, variations observed in 2024 show some fluctuation, with days on hand remaining above the initial levels in 2020.

Days of Sales Outstanding (DSO):
The DSO remained relatively stable throughout the period, fluctuating generally between 29 and 36 days. Early in the period, DSO was approximately 35 days, with a slight decrease evident around December 2020-2021, reaching approximately 29 days. The DSO then modestly increased to the low 34-35 days range toward mid-2024, with some minor fluctuations. This stability indicates consistent credit and collections practices, with no significant deterioration in receivables collection efficiency.

Number of Days of Payables:
The payables period exhibits considerable variability, with some of the most pronounced fluctuations observed from 2020 to 2023. Initially, the payables period was about 57 days in June 2020, then rapidly extended to over 133 days in September 2020 and early 2021, indicating extended payment terms, possibly as a cash management strategy. A sharp decrease occurred in mid-2021, with the period declining to approximately 82 days, but subsequently, the payables period increased markedly, reaching over 145 days during late 2022 and 2023. The prolonged period of over 191 days in March 2025 reflects substantial extensions in payables, likely aimed at optimizing cash flow or managing supplier relationships during this interval.

Summary of Trends:
- The increase in DOH from 2020 to 2021/2022 suggests a buildup of inventory levels, potentially linked to inventory management strategies or shifts in market demand. A subsequent reduction post-2021 indicates efforts to optimize stock levels.
- The stable DSO reflects consistent receivables management, with no significant changes in collection efficiency.
- The variability and upward trend in days of payables, especially the significant extensions observed in 2022 and 2023, suggest a strategic approach to managing payables, possibly to sustain liquidity or navigate supply chain conditions.

Overall, these activity ratios provide insights into inventory, receivables, and payables management practices, illustrating periods of inventory accumulation and extended payables, balanced by stable receivables collection, underpinning the company's operational strategies during the analyzed timeframe.

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Long-term

The analysis of The Clorox Company's long-term activity ratios reveals insights into the efficiency of asset utilization over the observed period.

Fixed Asset Turnover:
This ratio measures how effectively the company utilizes its fixed assets to generate sales. The data indicates fluctuations with a notable peak of 6.16 as of December 31, 2020, followed by a downward trend to approximately 4.24–4.37 during the subsequent fiscal periods. The highest ratio occurred in December 2020, suggesting a period of optimal fixed asset utilization. However, the decline thereafter points to reduced efficiency or increased investment in fixed assets not immediately translating into proportional sales. As of September 2023, the ratio is nearly consistent with the early 2020 levels, signaling a stabilization in fixed asset utilization.

Total Asset Turnover:
This ratio reflects the company's overall efficiency in generating sales from its total asset base. The data demonstrates relative stability with a slight upward trend: starting at approximately 1.08 in June 2020 and rising to around 1.27 by March 2025. The ratio experienced minor fluctuations but generally showed an improvement over time, with notable increases towards the later periods such as December 2023 and March 2024. The increase suggests enhanced efficiency in asset utilization, possibly due to better operational management, asset optimization strategies, or changes in the asset base that favor higher sales generation per dollar of assets.

Overall Assessment:
The company's fixed asset turnover ratio displayed a decline after the peak in late 2020, indicating a period of lower fixed asset efficiency, which may be attributable to increased capital expenditure, operational adjustments, or shifts in product demand. Conversely, the total asset turnover indicates improved overall asset utilization efficiency, supporting the notion that the company has been increasingly effective in leveraging its entire asset base to generate sales in recent periods. This combination suggests a strategic shift towards optimizing overall asset productivity, even if fixed asset utilization has experienced some compression.