Trex Company Inc (TREX)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Inventory turnover 4.08 4.58 6.04 7.20 7.65 13.47 10.34 6.12 5.97 7.23 10.15 10.03 11.01 11.11 9.78 9.11 9.49 11.55 11.29 9.58
Receivables turnover 13.00 8.41 4.62 3.29 21.53 5.34 3.40 3.12 8.94 13.54 7.63 6.40 7.90 4.22 3.75 2.99 7.70 3.23 3.13 3.17
Payables turnover 13.81 14.01 15.18 18.07 34.17 25.58 23.73 33.78 42.34 43.67 17.71 15.96 37.08 18.02 17.61 17.44 16.76 17.87 19.93 19.44
Working capital turnover — 11.61 6.59 8.51 13.46 11.82 20.52 84.33 — 18.82 7.57 4.39 3.83 4.36 4.95 5.31 4.09 3.51 3.56 3.75

The activity ratios of Trex Company Inc provide insights into the efficiency of its operations.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. Trex's inventory turnover fluctuated over the years but generally ranged between 5 to 13 times. A decreasing trend in recent periods could indicate potential issues with inventory management or slowing sales.

2. Receivables Turnover: This ratio demonstrates how efficiently a company collects outstanding receivables from its customers. Trex's receivables turnover saw fluctuations, with a significant increase in December 2023 to 21.53, suggesting improved collections. However, the ratio dropped subsequently, indicating potential challenges in collecting receivables promptly.

3. Payables Turnover: The payables turnover ratio reflects how quickly a company pays its suppliers. Trex's payables turnover varied over the years, indicating changes in payment cycles. A notable increase in payables turnover in March 2023 could point towards a more extended payment period to suppliers, while subsequent periods showed fluctuations.

4. Working Capital Turnover: This ratio measures how effectively a company utilizes its working capital to generate sales. Trex's working capital turnover was mostly positive, with a significant spike in March 2023 to 84.33, indicating efficient utilization of working capital. However, the ratio fluctuated in subsequent periods, suggesting changes in working capital efficiency.

Overall, analyzing Trex Company Inc's activity ratios provides valuable insights into its operational efficiency, inventory management, receivables collection, payment practices, and working capital utilization. It is essential for stakeholders to closely monitor these ratios to assess the company's performance and operational effectiveness.

Average number of days

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 89.43 79.63 60.41 50.71 47.74 27.10 35.31 59.68 61.13 50.46 35.95 36.38 33.16 32.84 37.33 40.08 38.47 31.60 32.32 38.12
Days of sales outstanding (DSO) days 28.07 43.40 78.93 111.05 16.95 68.33 107.40 116.98 40.84 26.95 47.84 57.03 46.20 86.44 97.33 121.96 47.43 113.04 116.59 114.96
Number of days of payables days 26.44 26.05 24.05 20.20 10.68 14.27 15.38 10.80 8.62 8.36 20.61 22.87 9.84 20.26 20.72 20.93 21.77 20.43 18.31 18.77

Trex Company Inc's activity ratios provide insights into the efficiency of the company's inventory management, accounts receivable collection, and accounts payable payment processes.

1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, it takes for Trex Company Inc to turn its inventory into sales. From March 31, 2020, to December 31, 2024, we observe fluctuations in the DOH. The DOH increased significantly from September 30, 2022, to December 31, 2024, indicating a potential buildup of inventory relative to sales.

2. Days of Sales Outstanding (DSO): DSO reflects how long it takes, on average, for the company to collect payment from its customers after making a sale. The trend in DSO for Trex Company Inc fluctuated over the years. A decrease in DSO from December 31, 2020, to December 31, 2021, suggests an improvement in accounts receivable collection efficiency, while the increase from March 31, 2023, to December 31, 2024, could indicate potential challenges in collecting payments promptly.

3. Number of Days of Payables: This ratio indicates the average number of days it takes for Trex Company Inc to pay its suppliers. A notable decrease in the number of days of payables from December 31, 2021, to September 30, 2022, might suggest the company is paying its suppliers more quickly. However, there was an increase in payables days from March 31, 2023, to December 31, 2024, which could imply a shift towards a longer payables cycle.

Overall, these activity ratios suggest that Trex Company Inc may need to focus on optimizing its inventory levels, enhancing accounts receivable collection processes, and managing payable terms effectively to improve its overall operational efficiency and cash flow management.

Long-term

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Fixed asset turnover 1.24 1.38 1.61 1.68 1.54 1.60 1.48 1.60 1.85 2.27 2.70 2.73 2.60 2.64 2.51 2.45 2.62 3.14 3.48 3.97
Total asset turnover 0.87 0.93 0.98 0.95 1.17 1.08 0.89 0.87 1.17 1.45 1.54 1.33 1.30 1.18 1.13 1.03 1.14 1.14 1.17 1.22

The Fixed Asset Turnover ratio indicates how efficiently Trex Company Inc is utilizing its fixed assets to generate sales. A higher ratio suggests better utilization of fixed assets. Over the period from March 31, 2020, to December 31, 2024, the Fixed Asset Turnover ratio declined from 3.97 to 1.24, indicating a decreasing efficiency in generating sales from fixed assets. This downward trend may suggest potential issues with asset management or declining sales relative to the level of fixed assets.

The Total Asset Turnover ratio reflects how well the company is using all its assets to generate revenue. A higher ratio implies efficient utilization of total assets to generate sales. From March 31, 2020, to December 31, 2024, the Total Asset Turnover ratio fluctuated, starting at 1.22 and ending at 0.87. The ratio peaked at 1.54 on June 30, 2022, indicating a period of efficient asset utilization, but then decreased significantly. This decline could signal inefficiencies in asset management or challenges in generating sales relative to the level of total assets.

Overall, the decreasing trend in both Fixed Asset Turnover and Total Asset Turnover ratios for Trex Company Inc over the analyzed period calls for a closer examination of the company's asset management strategies and sales generation capabilities.