Eagle Materials Inc (EXP)

Short-term

Turnover ratios

Based on the provided data, we can analyze the activity ratios of Eagle Materials Inc by examining four key ratios: inventory turnover, receivables turnover, payables turnover, and working capital turnover.

1. Inventory Turnover: This ratio measures how efficiently Eagle Materials manages its inventory. The inventory turnover for Eagle Materials has shown a general increasing trend from June 30, 2020, to March 31, 2025, peaking at 6.46 on September 30, 2022. A higher inventory turnover indicates that the company is selling its inventory more quickly, which is generally favorable as it can reduce holding costs and indicates effective sales management.

2. Receivables Turnover: This ratio reveals how quickly Eagle Materials collects payments from its customers. The receivables turnover fluctuates over the period but generally stays within a moderate range. A high receivables turnover suggests efficient credit policies and collection efforts, which is crucial for maintaining good cash flow.

3. Payables Turnover: The payables turnover ratio showcases how efficiently Eagle Materials pays its suppliers. The payables turnover ratio has shown a declining trend from June 30, 2020, to March 31, 2025. A decrease in payables turnover could imply that the company is taking longer to pay its suppliers, which may have implications on cash flow management and supplier relationships.

4. Working Capital Turnover: This ratio evaluates how well Eagle Materials generates sales revenue using its working capital. The ratio fluctuates over the period but generally indicates that the company is effectively using its working capital to generate sales. A higher working capital turnover ratio suggests that Eagle Materials is making efficient use of its resources to drive revenue growth.

In conclusion, the analysis of Eagle Materials Inc's activity ratios indicates a mix of efficient management of inventory and working capital, while there might be room for improvement in payables management to ensure ongoing positive relationships with suppliers.

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Average number of days

Eagle Materials Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers. Let's analyze the key activity ratios:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days a company takes to sell its inventory. Eagle Materials Inc's DOH has fluctuated over the periods, ranging from a low of 56.47 days to a high of 95.47 days.
- A decreasing trend in DOH, as seen from September 2022 to December 2022, indicates improved inventory management efficiency. However, there was an increase afterwards until March 2025.
- Overall, the company should focus on maintaining an optimal level of inventory to avoid excessive holding costs while ensuring product availability to meet customer demand.

2. Days of Sales Outstanding (DSO):
- DSO reflects how long it takes for a company to collect its accounts receivable. Eagle Materials Inc's DSO varied between 29.64 days and 48.74 days during the periods.
- A decreasing trend in DSO, like that seen from December 2022 to March 2023, shows improved efficiency in collecting receivables. However, DSO increased in subsequent periods.
- The company should aim to streamline its credit policies and collection procedures to reduce DSO, thereby improving cash flow and liquidity.

3. Number of Days of Payables:
- This ratio indicates the number of days it takes for a company to pay its suppliers. Eagle Materials Inc's number of days of payables ranged from 21.87 days to 34.46 days in the periods analyzed.
- A stable or increasing trend in days of payables can indicate stronger bargaining power with suppliers. However, a significant increase may strain supplier relationships.
- The company should strike a balance in managing payables to optimize cash flow without jeopardizing supplier relationships or facing potential supply chain disruptions.

In conclusion, Eagle Materials Inc should focus on optimizing its inventory levels, enhancing receivables collection efficiency, and managing payables effectively to improve overall working capital management and operational performance. Continued monitoring and strategic adjustments in these areas can lead to enhanced financial health and sustainable growth.

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Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate revenue. For Eagle Materials Inc, the Fixed Asset Turnover ratio has shown a consistent improvement over the years, starting at 0.87 in June 2020 and steadily increasing to 1.30 by September 2023, indicating that the company is generating more revenue per dollar invested in fixed assets.

On the other hand, the Total Asset Turnover ratio, which measures how efficiently the company is using all its assets to generate sales, has fluctuated over the years. It started at 0.50 in June 2020, increased to 0.77 by December 2022, and then maintained a relatively stable range between 0.69 and 0.78 from March 2023 to March 2025.

Overall, Eagle Materials Inc has shown improvements in its Fixed Asset Turnover ratio, indicating increased efficiency in utilizing fixed assets. While the Total Asset Turnover ratio has shown fluctuations, the company has managed to maintain a decent level of efficiency in generating sales relative to its total assets over the years.