Eagle Materials Inc (EXP)

Eagle Materials Inc's liquidity ratios, as indicated by the current ratio, quick ratio, and cash ratio over the years from March 31, 2021, to March 31, 2025, show variations in the company's ability to meet short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 3.91 in March 31, 2021, to 2.73 in March 31, 2025. While the current ratio declined over the years, it remained above 1, indicating that Eagle Materials Inc had more than enough current assets to cover its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also showed a decline from 2.55 in March 31, 2021, to 0.95 in March 31, 2025. This trend suggests that the company may have had difficulty meeting its short-term obligations without relying on the sale of inventory.

Moreover, the cash ratio, representing the company's ability to cover its current liabilities with its cash and cash equivalents, fluctuated over the years, reaching its lowest point of 0.07 in March 31, 2023, and highest level of 0.15 in March 31, 2024. This indicates that Eagle Materials Inc may have had varying levels of cash available to meet its short-term obligations during this period.

Overall, the liquidity ratios of Eagle Materials Inc reflect a mixed performance in managing its short-term liquidity position. The declining trend in the current and quick ratios could indicate a weakening ability to cover short-term obligations, while fluctuations in the cash ratio suggest varying levels of cash availability for meeting immediate needs over the years.

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Additional liquidity measure

The cash conversion cycle of Eagle Materials Inc has exhibited fluctuations over the past five years. As of March 31, 2021, the company's cash conversion cycle stood at 79.30 days, reflecting the number of days it takes for Eagle Materials to convert its investments in inventory and other resources into cash flows from sales.

Subsequently, by March 31, 2022, the cash conversion cycle decreased to 69.43 days, indicating an improvement in efficiency in managing its working capital. However, in the following years, there was a reversal in this trend, with the cycle increasing to 79.81 days as of March 31, 2023, further extending to 91.61 days by March 31, 2024.

The most recent data as of March 31, 2025, shows a notable increase in the cash conversion cycle to 99.88 days, suggesting potential challenges in efficiently managing its working capital and converting resources into cash.

This analysis highlights the importance for Eagle Materials Inc to focus on optimizing its cash conversion cycle to enhance its liquidity and operational efficiency, thereby ensuring sustainable financial performance and growth in the long term.