CSW Industrials, Inc. (CSW)

Short-term

Turnover ratios

The analysis of CSW Industrials, Inc.'s activity ratios over the period from March 31, 2021, to March 31, 2025, reveals several noteworthy trends and patterns.

Inventory Turnover:
The inventory turnover ratio showed a consistent upward trend, improving from 2.39 in 2021 to 2.47 in 2022, then to 2.72 in 2023, and reaching 2.93 in 2024. This indicates that the company has been increasing the efficiency with which it manages and converts inventory into sales over this period. A higher inventory turnover suggests more effective inventory management and possibly an improved sales environment. However, in 2025, the ratio decreased to 2.49, signaling a potential slowdown in inventory turnover efficiency or an accumulation of inventory that may warrant further investigation.

Receivables Turnover:
The receivables turnover ratio reflects an upward progression, moving from 4.34 in 2021 to 5.10 in 2022, then significantly rising to 6.17 in 2023. In the subsequent years, the ratio sustained a high level with 5.56 in 2024 and 5.57 in 2025. This upward trend signifies an improvement in the collection of accounts receivable, reducing the days sales outstanding (DSO) and indicating more efficient credit and collections management. The stabilization in 2024 and 2025 suggests that the company has reached a relatively steady state regarding receivables collection efficiency.

Payables Turnover:
The payables turnover ratio increased notably from 7.22 in 2021 to 7.74 in 2022, then sharply surged to 10.82 in 2023. In the following years, the ratio decreased slightly to 9.14 in 2024 and further to 8.86 in 2025. The significant rise in 2023 might indicate that the company accelerated its payments to suppliers or reduced its accounts payable period, possibly to strengthen supplier relationships or due to cash flow strategies. The subsequent modest decline suggests a normalization or slight extension in payables periods, which could be aimed at optimizing working capital.

Working Capital Turnover:
The working capital turnover ratio displays a positive trend, increasing from 3.18 in 2021 to 3.43 in 2022, and slightly to 3.52 in 2023, followed by further increases to 3.68 in 2024. These changes indicate improved efficiency in utilizing working capital to generate sales revenue. However, this upward trend reverses significantly in 2025, where the ratio drops to 1.97, suggesting a substantial decline in the efficiency of working capital utilization. This could reflect increased working capital levels without a proportionate increase in sales or a deterioration in operational efficiency.

Overall Impression:
The trends in inventory and receivables turnover ratios point toward ongoing improvements in operational efficiency, with the company effectively managing inventories and receivables over most of the analyzed period. The payables turnover ratio's fluctuations highlight shifts in accounts payable management strategies. The decline in working capital turnover in 2025 warrants closer examination, as it indicates possible challenges in asset utilization or changes in sales dynamics. Collectively, these activity ratios suggest a generally positive trend in operational efficiency up to 2024, with some signs of potential strain or strategic shifts emerging in 2025.

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Average number of days

The activity ratios for CSW Industrials, Inc. over the period from March 31, 2021, to March 31, 2025, reflect notable trends in inventory management, receivables collection, and payables practices.

Inventory Turnover (Days of Inventory on Hand):
The company demonstrated a consistent improvement in inventory efficiency during this period. The days of inventory on hand decreased from approximately 152.73 days in 2021 to 147.90 days in 2022, further decreasing to 134.12 days in 2023. This trend continued into 2024, with inventory days reducing to 124.46 days, indicating that the firm is managing its inventory more effectively by turning over stock more rapidly. However, in 2025, there was a reversal, with inventory days increasing to approximately 146.66 days, suggesting a slowdown in inventory turnover and potential accumulation of unsold stock or strategic inventory adjustments.

Accounts Receivable Collection Period (Days of Sales Outstanding):
The DSO ratio illustrated an improvement in receivables management initially, decreasing from 84.19 days in 2021 to 71.55 days in 2022 and further to 59.12 days in 2023. This indicates the company was collecting payments more quickly during this period. In 2024, the DSO increased modestly to 65.68 days, and in 2025, it remained relatively stable at around 65.55 days, suggesting a stabilization of collection efficiency with no significant deterioration or improvement in receivables turnover.

Accounts Payable Period (Number of Days of Payables):
The number of days CSW Industrials, Inc. takes to pay its suppliers increased over the analyzed period. It decreased slightly from roughly 50.52 days in 2021 to 47.13 days in 2022, then dropped further to 33.75 days in 2023. Subsequently, the payable period increased to 39.95 days in 2024 and slightly up again to 41.22 days in 2025. This trend indicates an initial tightening in payment practices, followed by a gradual extension, which may reflect strategic cash management, supplier negotiation outcomes, or shifts toward more lenient payment schedules.

Overall Assessment:
The company's activity ratios display a pattern of improving operational efficiency in inventory management and receivables collection in the early years, followed by stabilization or slight deterioration in later years. The reduction in inventory days aligns with potentially more efficient stocking policies, while the decreasing DSO suggests tighter credit and collection practices. The lengthening of payables indicates a shift toward extending payment terms, possibly to optimize working capital. These activity trends collectively point to ongoing efforts to enhance operational liquidity and efficiency, albeit with some fluctuations in recent years that warrant further analysis to determine underlying strategic or operational causes.

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Long-term

The long-term activity ratios of CSW Industrials, Inc. over the specified periods indicate notable trends in asset utilization efficiency. The fixed asset turnover ratio, which measures how effectively the company is using its fixed assets to generate sales, was indeterminate (denoted by "—") for March 31, 2021 and 2022, suggesting an absence of significant fixed assets or minimal activity involving such assets during those periods. Starting March 31, 2023, the ratio was recorded at 5.12, reflecting an improved capacity to generate sales from the fixed assets, and it further increased to 5.77 by March 31, 2024, indicating enhanced efficiency in asset utilization. However, by March 31, 2025, the ratio slightly declined to 5.65, which may suggest a marginal decrease in the fixed asset efficiency or a slight increase in fixed assets without a proportional increase in sales.

Conversely, the total asset turnover ratio, which captures the overall effectiveness of all assets in generating sales, shows a consistent upward trend from 0.48 on March 31, 2021, to 0.73 in 2023. This progression reflects a year-over-year improvement in overall asset efficiency, with the company generating more sales per dollar of total assets. The ratio continued to increase to 0.76 on March 31, 2024, signifying an ongoing enhancement in asset utilization. However, in the subsequent period ending March 31, 2025, the ratio declined slightly to 0.64, suggesting a slight reduction in overall asset efficiency, which could be attributed to increased asset levels without a commensurate increase in sales or possible operational adjustments.

In summary, CSW Industrials, Inc. demonstrated marked improvement in asset utilization efficiency starting from 2023, particularly in fixed asset turnover, followed by a peak in total asset turnover in 2024 before experiencing a modest decline in 2025. This pattern indicates an initial period of optimizing asset use, with recent slight regressions possibly due to changes in asset base or sales dynamics.