Worthington Steel Inc (WS)

Short-term

Turnover ratios

The activity ratios of Worthington Steel Inc. exhibit notable fluctuations across the observed periods, reflecting shifts in operational efficiency and working capital management over time.

Inventory Turnover: The ratio demonstrates a decline from 8.43 times on February 28, 2023, to 6.63 on August 31, 2023, indicating a potential slowdown in inventory sales or increased inventory holdings. Subsequently, there is an uptick to 7.92 by November 30, 2023, and minor fluctuations thereafter, culminating in 8.33 on November 30, 2024. The data suggests a pattern of initial inventory accumulation followed by a gradual recovery, approaching earlier turnover levels.

Receivables Turnover: The ratio decreased from 8.04 on February 28, 2023, to a low of 6.86 on August 31, 2023. Post-August, it exhibits improvement, rising back to 7.87 in November 2023 and reaching 8.61 on November 30, 2024, before slightly declining to 7.54 in February 2025. These movements imply periods of extended receivable collection cycles, succeeded by periods of efficiency improvements.

Payables Turnover: The ratio shows an initial decrease from 8.70 on February 28, 2023, to 7.50 on August 31, 2023, then increases significantly to 10.01 on November 30, 2024, indicating the company is settling its payables more quickly during this period. However, by May 31, 2025, the ratio declines sharply to 6.72, suggesting a possible extension in payable terms or delayed payments.

Working Capital Turnover: This ratio starts at 7.56 in February 2023, initially declining to 6.89 in November 2023, which may reflect lower efficiency in utilizing working capital. A notable increase to 9.03 in February 2024 indicates improved working capital utilization. Subsequently, the ratio maintains relatively stable levels around 8.4 to 8.95, with a slight decline thereafter, illustrating varying degrees of operational efficiency over the periods assessed.

Overall, these activity ratios reveal a pattern of cyclical fluctuation in operational activity and working capital management, with periods of decreased efficiency followed by recoveries. The changes in inventory, receivables, and payables turnover ratios suggest adjustments in inventory holding policies, collection efforts, and payment strategies that impact overall operational performance.

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Average number of days

The activity ratios for Worthington Steel Inc, as reflected in the days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, demonstrate certain trends over the analyzed periods.

Starting with the days of inventory on hand, the data indicates an increase from 43.28 days as of February 28, 2023, to a peak of 55.05 days on August 31, 2023. Subsequently, this ratio declines to approximately 43.80 days by November 30, 2024, before rising again to around 50.63 days as of February 29, 2024, and moderating to 49.47 days by May 31, 2024. Overall, there is notable fluctuation, with inventory levels rising during certain periods and subsequently decreasing, suggesting adjustments in inventory management or shifts in production and sales cycles.

Regarding the accounts receivable collection period, as measured by days of sales outstanding, the ratio exhibits an upward trend from 45.39 days in February 2023 to a peak of 53.19 days in August 2023. Following this, the DSO diminishes to 46.40 days by November 2023 and further to approximately 42.39 days in November 2024. The period then sees a modest increase again to 50.87 days in February 2024 before stabilizing near 48.42 days in the latest data point. These movements suggest periods of extended collection times, possibly indicating fluctuating credit policies, customer payment behaviors, or efforts to optimize receivables.

The number of days of payables reflects the company's payment practices towards suppliers. Initially, the payables period ranges from approximately 41.96 days in February 2023 up to 50.52 days in February 2024. There is an upward adjustment noted in the latest period, reaching 54.32 days in May 2025. This pattern implies that the company has been extending its payable periods over time, which could be a strategic choice to optimize cash flow but may also impact supplier relationships.

In summary, the activity ratios of Worthington Steel Inc reveal periods of inventory buildup and extend periods for receivables and payables. These movements suggest a strategic management of working capital components, potentially aiming to balance operational efficiency with cash flow optimization. The fluctuations in these ratios reflect adjustments in inventory and credit policies, aligned with market or internal operational considerations.

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Long-term

The analysis of Worthington Steel Inc.'s long-term activity ratios reveals insights into the company's asset utilization efficiency over the specified periods. Notably, the Fixed Asset Turnover ratio is only available for May 31, 2023, through August 31, 2023, with values of 7.37 and 6.81 respectively, indicating a relatively high utilization of fixed assets during this interval. The absence of data beyond August 2023 precludes further trend analysis for fixed assets.

In contrast, the Total Asset Turnover ratio demonstrates a declining trend over the observed periods. Starting at 2.15 on February 28, 2023, it exhibits a gradual decrease through subsequent dates: 2.05 (May 31, 2023), 1.85 (August 31, 2023), and 1.78 (November 30, 2023). The ratio fluctuates slightly around this period with a slight increase to 1.84 in February 2024 and May 2024, maintaining this level into August 2024. However, a subsequent decline is observed, with the ratio dropping to 1.89 in November 2024, followed by more notable decreases to 1.76 in February 2025 and further to 1.58 by May 2025.

This downward trend in total asset turnover indicates a decreasing efficiency in utilizing the company's total assets to generate sales over time. The stability observed during mid-2024 suggests a period of relative consistency, while the overall declining pattern through early 2025 may highlight challenges in asset utilization or increased asset base without proportional sales growth. The absence of fixed asset turnover data beyond August 2023 limits the ability to analyze whether the fixed assets' utilization aligns with the total assets trend or if specific asset categories are experiencing differential efficiency changes.