Worthington Industries Inc (WOR)

Short-term

Turnover ratios

The activity ratios for Worthington Industries Inc. over the period from May 2021 through May 2025 exhibit notable fluctuations and trends in inventory, receivables, payables, and working capital turnover.

Inventory Turnover:
- The ratio shows a consistent upward trend from 4.48 in May 2021 to 7.00 in May 2023, indicating an improvement in inventory management efficiency and more frequent inventory renewal.
- Post-2023, the ratio declines slightly to 5.84 in May 2024 and further to 4.93 in May 2025, suggesting a reduction in inventory turnover efficiency or potential changes in sales or inventory holding strategies.

Receivables Turnover:
- The receivables turnover ratio increased substantially from 4.94 in May 2021 to a peak of 21.89 in May 2023, indicating significantly improved collection efficiency.
- After May 2023, the ratio declines to 5.74 in May 2024 and further to 5.05 in May 2025, reflecting a possible loosening of credit policies, longer collection cycles, or changes in customer payment behavior.

Payables Turnover:
- The ratio exhibits considerable growth from 4.73 in May 2021 to an exceptionally high 33.56 in May 2023, implying that the company was paying its suppliers much more frequently or managing payables more efficiently during this period.
- Subsequently, the ratio decreases to 10.65 in May 2024 and 8.09 in May 2025, indicating a moderation in payables management or a shift towards longer payment periods.

Working Capital Turnover:
- The ratio increases from 2.69 in May 2021 to a peak of 6.14 in May 2022, reflecting an enhancement in utilizing working capital to generate sales.
- Afterwards, the ratio declines to 4.27 in May 2023, and further to 2.51 and 2.36 in May 2024 and May 2025, respectively, indicating a decrease in the efficiency of working capital utilization over time.

Overall, the activity ratios depict a path of significant improvement in operational efficiency culminating in May 2023, followed by a period of normalization or slight decline. The trends suggest the company experienced enhanced inventory and receivables management leading to higher turnover rates during the peak period, while payables and working capital management appear to have become more conservative post-2023. These shifts may reflect changes in operational strategies, market conditions, or broader economic factors impacting the company's short-term asset management practices.

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Average number of days

The activity ratios for Worthington Industries Inc., specifically the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables, exhibit notable fluctuations over the analyzed period from May 2021 through May 2025.

Days of Inventory on Hand (DOH):
The DOH decreased steadily from approximately 81.40 days in May 2021 to 52.18 days in May 2023, indicating an improvement in inventory management and potentially increased efficiency in inventory turnover during this timeframe. However, there was an uptick to 62.54 days in May 2024 and further to 74.07 days in May 2025, suggesting a potential slowdown in inventory turnover or a strategic accumulation of inventory, which might be due to anticipated demand changes, supply chain considerations, or inventory management policies.

Days of Sales Outstanding (DSO):
The DSO declined sharply from 73.88 days in May 2021 to a notably low 16.67 days in May 2023, reflecting an improvement in receivables collection efficiency and potentially better credit policies or cash flow management during that period. Nevertheless, there was a significant increase to 63.62 days in May 2024 and further to 72.30 days in May 2025, indicating a reversal of earlier efficiencies and a lengthening of receivables collection periods. This shift could suggest more lenient credit terms, delays in receivable collections, or changes in customer payment behaviors.

Number of Days of Payables:
The payables period reduced from 77.22 days in May 2021 to 10.88 days in May 2023, signifying a tendency to settle payables more quickly, which might reflect improved cash management or negotiating terms that favor swift payments. Subsequently, this metric increased to 34.27 days in May 2024 and further to 45.13 days in May 2025, indicating a trend toward extending the payable period again, possibly to optimize working capital or due to changes in supplier agreements or payment strategies.

Overall Observations:
The pattern between 2021 and 2023 suggests a phase of operational efficiency improvements, characterized by reduced inventory days and receivables, coupled with shorter payable periods. Post-2023, these ratios display adverse shifts, with inventory days and receivables days increasing, and payable days extending again, which may point to strategic changes, increased working capital needs, or responses to external factors affecting cash flow and working capital management. These variations highlight evolving operational practices and could impact the company's liquidity and overall activity efficiency.

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Long-term

The long-term activity ratios of Worthington Industries Inc., as represented by fixed asset turnover and total asset turnover, demonstrate notable trends over the analyzed periods.

The fixed asset turnover ratio indicates the efficiency with which the company utilizes its fixed assets to generate sales. From May 31, 2021, to May 31, 2023, there was a steady increase from 5.76 to 6.59, suggesting improved utilization of fixed assets during this period. However, the ratio declined slightly to 6.34 by May 31, 2023, indicating a marginal reduction in fixed asset efficiency. The absence of data beyond May 31, 2023, precludes further trend analysis.

In contrast, the total asset turnover ratio reflects overall asset utilization efficiency. The ratio experienced a significant rise from 0.94 in 2021 to 1.44 in 2022, indicating a more effective deployment of total assets to generate sales. Subsequently, the ratio decreased slightly to 1.35 in 2023, signaling a modest decline in overall asset efficiency. Projected data for 2024 and 2025 show further decreases to 0.76 and 0.68, respectively, suggesting a downward trend in total asset efficiency over these future periods.

Overall, the analysis suggests that Worthington Industries enhanced its fixed asset efficiency during 2021–2023 but faced a decline in total asset efficiency in subsequent years. The declining total asset turnover ratios in the forecasted years imply potential challenges in asset utilization or sales generation relative to assets employed. The divergence between fixed asset and total asset efficiencies highlights differing utilization dynamics of specific asset classes within the company's operations.