Carpenter Technology Corporation (CRS)

Short-term

Turnover ratios

The analysis of Carpenter Technology Corporation's activity ratios over the period from June 30, 2021, to June 30, 2025, provides insights into the company's operational efficiency concerning inventory management, receivables collection, payables management, and working capital utilization.

Inventory Turnover: The ratio observed a relatively stable trend from June 30, 2021, through June 30, 2023, maintaining a level around 3.46. However, there was a decline commencing in June 2024, with the ratio decreasing to 2.96 and further declining to 2.66 by June 30, 2025. This downward trend indicates a diminishing efficiency in inventory utilization, suggesting that inventory is being held longer before sale or turnover is slowing, potentially reflecting challenges in inventory management or shifts in sales volume.

Receivables Turnover: The receivables turnover ratio demonstrated a slight upward trend over the period. Starting at 4.78 in 2021, it modestly increased to 4.80 in 2022 and 2023. The upward movement became more apparent in 2024, reaching 4.91, and further improving to 5.00 in 2025. This trend indicates an increasing efficiency in collecting receivables, with the company collecting its accounts receivable more frequently within the year, thereby enhancing cash flow and reducing the period receivables remain outstanding.

Payables Turnover: The payables turnover ratio experienced notable fluctuations. It was highest in June 2021 at 10.36, followed by a significant decrease to 6.97 in 2022. Subsequently, the ratio increased again, reaching 7.96 in 2023, then slightly rising to 8.24 in 2024, before a minor decline to 7.89 in 2025. The initial decline suggests the company was taking longer to pay suppliers in 2022, potentially indicating tighter cash flow or strategic payment deferrals. The subsequent stabilization and slight rise in 2023 and 2024 imply a return to more prompt payables management, though the ratio remained below the 2021 level.

Working Capital Turnover: This ratio shows a positive trend from June 30, 2021, through June 30, 2023, increasing from 1.82 to 3.10, reflecting improved efficiency in utilizing working capital to generate sales or revenues. However, from June 2024 onward, the ratio declined to 2.45 and then to 2.25 by June 30, 2025. The decline signifies a reduction in the efficiency of working capital utilization, which could be due to increased working capital levels without corresponding growth in sales or revenue, or changing operational dynamics.

Overall, the activity ratios depict a period of stability in inventory turnover initially, followed by a decline indicating potential inventory management challenges. Conversely, receivables management has improved, reflecting more efficient collections. Payables management shows initial signs of relaxation, then stabilization, suggesting strategic shifts in cash management practices. The fluctuations in working capital turnover imply some adjustments in the company's operational efficiency relating to the deployment of working capital to support sales activities.

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Average number of days

The activity ratios for Carpenter Technology Corporation, as reflected in the provided data, indicate several trends over the specified periods.

Starting with inventory management, the Days of Inventory on Hand (DOH) demonstrated relative stability from June 30, 2021, through June 30, 2023, fluctuating narrowly between approximately 105.37 and 107.37 days. However, from June 30, 2024, to June 30, 2025, there was a notable increase in DOH, rising from 123.39 days to 137.41 days. This escalation suggests a lengthening of the time inventory remains held before sale, potentially indicating slower inventory turnover or strategic inventory buildup.

In terms of receivables management, measured by Days of Sales Outstanding (DSO), the data shows a generally consistent pattern with slight fluctuations. From 76.36 days in 2021, the DSO slightly decreased over the subsequent years, reaching 73.01 days in 2025. This gradual decline reflects a modest improvement in collection efficiency, with the company collecting receivables slightly faster over time.

Regarding payables, represented by the Number of Days of Payables, there was an increase from 35.25 days in 2021 to 52.40 days in 2022. Following this peak, the payables period decreased to 45.87 days in 2023 and then stabilized around the low to mid-40s in subsequent years, ending at 46.29 days in 2025. The extended payables period in 2022 may indicate a strategic attempt to delay payments to suppliers, while the subsequent stabilization suggests a more balanced approach to managing payables.

Overall, the activity ratios display a pattern of increased inventory holding periods in recent years alongside a slight improvement in receivables collection timing and a fluctuating but generally stabilized payables period. The shift toward longer inventory days could pose concerns related to inventory obsolescence or cash flow management, whereas the improved receivables collection reflects ongoing operational efficiencies.

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Long-term

The analysis of Carpenter Technology Corporation’s long-term activity ratios over the period from June 30, 2021, to June 30, 2024, indicates a consistent improvement in asset utilization efficiency. Specifically, the Fixed Asset Turnover ratio has shown a steady upward trend, increasing from 1.01 in 2021 to 2.01 in 2024. This progression suggests that the company has been increasingly effective in generating sales from its fixed assets, reflecting improved asset management or capacity utilization.

Similarly, the Total Asset Turnover ratio has experienced a positive trajectory, rising from 0.50 in 2021 to 0.84 in both 2023 and 2024. This indicates a consistent enhancement in the overall efficiency of utilizing total assets to generate sales. The stable levels in 2023 and 2024 (both at 0.84) imply a plateau in total asset efficiency, which might suggest a period of steadiness in asset utilization before further improvements.

Overall, these ratios underscore a pattern of improving long-term asset activity efficiency, with significant gains in fixed asset utilization, while total asset efficiency has remained relatively stable after a notable increase from the previous year. The absence of ratios for 2025 precludes insights into the most recent period; however, the observed trends demonstrate ongoing efforts to optimize asset deployment to support sales growth.