CSW Industrials, Inc. (CSW)

The liquidity ratios of CSW Industrials, Inc. over the period from March 31, 2021, to March 31, 2025, exhibit a generally positive trend, indicating an improvement in the company's short-term liquidity position.

The current ratio, which measures the company's ability to cover its current liabilities with its current assets, increased from 2.59 in 2021 to a peak of 4.03 in 2025. This upward trend suggests that the company has strengthened its overall liquidity buffer, providing greater assurance of its ability to meet short-term obligations with readily available assets. The fluctuation noted in 2022 and 2024 (2.56 and 2.86 respectively) indicates minor variations but overall stability in the company's capacity to cover its short-term liabilities.

The quick ratio, a more stringent measure excluding inventory from current assets, also reflects an improvement, rising from 1.29 in 2021 to 2.61 in 2025. This signifies a growing proportion of liquid assets available to settle immediate liabilities, further emphasizing enhanced liquidity. The steady increase suggests effective management of liquid assets relative to current liabilities.

The cash ratio, which assesses the most conservative measure of liquidity by considering only cash and cash equivalents, shows a modest rise from 0.12 in 2021 to 0.20 in 2024, before a significant jump to 1.53 in 2025. This indicates a substantial accumulation of cash or cash equivalents by 2025, significantly surpassing earlier levels and providing a very strong liquidity position. The sudden increase in 2025 implies either a strategically accumulated cash reserve or a change in short-term cash management policies.

Overall, the data indicates that CSW Industrials, Inc. has demonstrated consistent improvement in its short-term liquidity ratios over the assessed period. The increasing current, quick, and cash ratios suggest a prudent approach to liquidity management, positioning the company favorably to meet its immediate financial obligations and adapt to potential operational or market fluctuations.

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Additional liquidity measure

The cash conversion cycle (CCC) of CSW Industrials, Inc. has exhibited notable fluctuations over the period from March 31, 2021, to March 31, 2025. At the end of fiscal year 2021, the CCC stood at approximately 186.41 days, indicating that, on average, the company took about six months and an additional two weeks to convert its investments in inventory and receivables into cash, after accounting for the period it took to settle its payables.

By fiscal year 2022, the CCC decreased to approximately 172.32 days. This reduction suggests an improvement in the company's overall cash flow management, possibly through shortened receivables collection periods, reduced inventory holding times, or extended payables, resulting in more efficient working capital utilization. The downward trend continued into fiscal year 2023, with the CCC further declining to approximately 159.49 days, reflecting ongoing enhancements in liquidity management and operational efficiency.

However, in the subsequent fiscal year 2024, the CCC experienced an increase to roughly 150.19 days. While still below the 2021 levels, this rise indicates a slight deterioration in the cash conversion process, which may be attributed to changes such as longer receivable collection periods, increased inventory days, or shifts in supplier payment terms. Notably, the figure in 2025 rose again to approximately 171.00 days, exceeding the levels observed in 2023 and approaching the higher end of the prior years' range. This increase suggests a potential weakening in working capital management, implying that it may now take the company longer to convert investments into cash.

Overall, the analysis demonstrates a trend of improvement from 2021 through 2023, followed by a reversal in 2024 and 2025. These movements could be associated with strategic operational decisions, changes in market or supply chain conditions, or variations in customer payment behavior. Continuous monitoring of these components would be necessary to fully understand the underlying factors driving the fluctuations in CSW Industrials, Inc.'s cash conversion cycle.