CSX Corp. (NASDAQ:CSX)

The analysis of the financial ratios over the examined periods reveals several noteworthy trends in operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio shows an initial increase from 46.58 to a peak of 55.61 in the period ending September 2018, indicating improved efficiency in inventory management during this time. Subsequently, a gradual decline follows, reaching a low point around 35.04 by March 2021. After this period, there is some recovery, with fluctuations leading to a moderate increase to 43.56 by March 2023. Overall, the ratio exhibits volatility but suggests a general weakening in the speed at which inventory is converted into sales after 2018.

Receivables Turnover

The receivables turnover ratio remains relatively stable, fluctuating between approximately 8.99 and 12.76. There is a slight downward drift from 12.13 in September 2018 to a minimum near 8.99 in late 2021, suggestive of a slower collection process. However, turnover rebounds slightly toward 11.31 in March 2023, indicating some improvement in receivables management toward the end of the period.

Payables Turnover

The payables turnover ratio displays minor fluctuations within a range of about 10.21 to 13.22. Although relatively stable, slight increases in the ratio in late 2022 and early 2023 indicate a tendency to pay suppliers somewhat faster in those latter periods compared to earlier years.

Working Capital Turnover

This ratio exhibits considerable variability. Starting at 18.85 in the period ending March 2019, it experiences a pronounced decline toward 4.21 by June 2021, signaling reduced efficiency in the use of working capital during this interval. Thereafter, notable fluctuations occur, with a significant peak at 35.67 in late 2022, followed by a moderate decline. The volatility reflects inconsistent working capital utilization and changing operational circumstances.

Average Inventory Processing Period

The average number of days to process inventory remains relatively stable, fluctuating within a narrow band of 7 to 10 days throughout the observed intervals. This stability complements the fluctuating inventory turnover ratio and indicates consistent inventory management practices over time.

Average Receivable Collection Period

The average days to collect receivables hovers mostly between 29 and 41 days, with an increasing tendency from 30 days in early periods to peaks approaching 41 days in 2021. This indicates a lengthening in the collection cycle during certain periods, potentially impacting cash flow.

Operating Cycle

The operating cycle, combining inventory and receivables periods, generally ranges between 37 and 50 days. Peaks around 48 to 50 days in 2021 correspond with the longer collection and inventory periods, indicating longer capital tie-ups in operations during this timeframe.

Average Payables Payment Period

The average payment period for payables remains fairly consistent, oscillating between 28 and 36 days. Some increase to 36 days in late 2020 suggests a temporary extension in payment terms or delayed payments during that period.

Cash Conversion Cycle

The cash conversion cycle shows variability, with low points of 5 to 7 days in 2020 indicating efficient conversion of resources into cash. However, the cycle extends to highs of 20 to 21 days around 2021 and 2022, suggesting longer durations to convert inputs into cash, which could strain liquidity. The cash conversion cycle reduces again toward early 2023.

In summary, the financial ratios indicate an overall pattern of fluctuating operational efficiency and working capital management stability over the period studied. Key observations include an initial strong inventory turnover followed by weakening, a lengthening in receivables collection periods impacting cash flow, and variability in working capital turnover reflecting changing operational conditions. The cash conversion cycle's oscillations underscore periods of both efficient and strained liquidity management.

The data presents a multi-year view of selected financial metrics, highlighting the changes in revenue, materials and supplies expenses, and inventory turnover ratios on a quarterly basis.

Revenue Trends

Revenue demonstrated some fluctuation over the analyzed period. Initially, there was a gradual increase from $2,876 million in Q1 2018 to a peak near $3,143 million by Q4 2018. Subsequently, revenue dipped slightly and remained relatively stable around the $2,885 to $3,060 million range throughout 2019. The onset of 2020 marked a significant decline, hitting a low of approximately $2,255 million in Q2 2020, likely due to economic disruptions. However, a recovery trend is visible from Q3 2020 onward, with revenue rebounding steadily, reaching a new peak of $3,895 million in Q3 2022 before slightly tapering off to $3,706 million by Q1 2023.

Materials and Supplies Expenses

Expenses related to materials and supplies show a generally upward trajectory. Starting from $369 million in Q1 2018, these costs declined until mid-2019, reaching a low of $222 million in Q2 2019. Afterwards, the expense increased steadily, paralleling the revenue recovery, ultimately rising to $394 million in Q1 2023. This suggests that material costs, or procurement volumes, have grown in tandem with increasing operational scale or pricing pressures.

Inventory Turnover Ratios

The inventory turnover ratio data, available from Q1 2019 onwards, reflects some variability. It peaked at 55.61 in Q3 2019, indicating efficient inventory management during that period. Post-2019, the ratio trends downward, hitting a low approximately at 35.04 in Q1 2021, which may indicate slower inventory movement or accumulation. From mid-2021, a modest improvement appears, with ratios moving back toward the high 30s and low 40s range. This fluctuation may be associated with supply chain dynamics or changes in sales velocity in response to market conditions.

In summary, the financial data reveals a cyclic trend influenced by broader economic factors. Revenue and materials costs experienced contraction and recovery phases, with inventory turnover exhibiting variable efficiency over time. The recovery of revenue alongside increased materials expenses suggests a resurgence in business activity, while inventory management efficiency may require attention to align with growth trends and market demand.

Revenue Trends

Revenue exhibited moderate fluctuations over the analyzed periods, generally ranging between approximately $2.8 billion and $3.4 billion. A slight downward trend is observable from early 2018 to mid-2020, with notable decline around mid-2020 likely linked to broader economic factors. From late 2020 onwards, revenue showed recovery and growth, reaching a peak near $3.9 billion by mid-2022 before slightly declining again in early 2023.

Accounts Receivable, Net Trends

The accounts receivable balance demonstrated a gradually increasing trend from 2018 through 2022, rising from roughly $1.0 billion to over $1.4 billion. Despite some quarter-to-quarter variability, this upward movement suggests growth in sales or extended credit terms. Some dips are observed, particularly in late 2021 and early 2022, followed by renewed increases, indicating possible cyclicality or adjustments in collection policies.

Receivables Turnover Ratio Trends

The receivables turnover ratio, which measures the efficiency of collections, showed a gradual decline from a high around 12.1 in early 2018 to below 9.0 in late 2021, indicating a slowdown in the rate at which receivables are converted to cash. However, recovery was seen in 2022, with turnover improving back toward 11.0 by early 2023. This pattern implies that collection efficiencies worsened during the middle periods but improved subsequently, potentially due to changes in credit management or customer payment behaviors.

Overall Analysis

The data indicates that revenue faced pressures during 2019 and 2020, aligning with broader economic disruptions, but showed notable recovery and growth thereafter. Concurrently, accounts receivable amounts increased, suggesting either higher sales volumes or longer collection periods. The receivables turnover ratio corroborates a trend of declining collection efficiency during 2018-2021, with improvements in 2022 reflecting enhanced collections or credit controls. Collectively, these dynamics point to evolving operational and financial management conditions, with recent periods exhibiting stronger performance and improved liquidity management.

The revenue of the company exhibits fluctuations over the analyzed periods, with periods of both declines and growth. From March 2018 to December 2018, revenue increased steadily from 2,876 to 3,143 million US dollars. A slight declining trend followed through most of 2019, with revenue decreasing to 2,885 million by the year's end. The first half of 2020 experienced a notable decrease, reaching the lowest point in June 2020 at 2,255 million, likely influenced by external factors affecting the business environment. Subsequently, revenue recovered in the second half of 2020 and continued an upward trajectory until the end of 2021, peaking at 3,427 million in December 2021. The most recent data from 2022 and early 2023 illustrate some volatility; revenue climbed to 3,895 million in June 2022, then showed a slight decrease towards March 2023, settling at 3,706 million.

Accounts payable similarly reflects changes parallel to revenue movements, though with less pronounced volatility. The payable balance generally showed a gradual increase from 905 million in March 2018 to a peak of 1,152 million in September 2022. A minor drop occurred after this peak but rebounded slightly to 1,203 million by March 2023. This pattern suggests increasing obligations or purchasing activity over time, with some balancing adjustments in the most recent periods.

Regarding payables turnover ratio, data are only available from March 2019 onwards. The ratio starts at 12.91 and exhibits modest fluctuations within a relatively narrow range. The turnover ratio declined through 2019, reaching a low around 10.21 in December 2019, indicating slower payments or longer periods before settling payables. The ratio then generally improved in 2020 and 2021, fluctuating between approximately 12 and 13.5, which implies an enhancement in the efficiency of payables management. In 2022 and early 2023, the ratio shows some oscillation but remains within a similar range, suggesting a consistent yet variable approach to managing accounts payable turnover.

In summary, the company’s revenue shows a recovery trend after a mid-2020 dip, followed by growth peaking in late 2021 and some variability thereafter. Accounts payable grew steadily over time with a recent peak in late 2022. The payables turnover ratio indicates some variation in payment practices but maintains a general level of operational efficiency in settling liabilities across the latest periods.

Revenue Trends

Growth from early 2018 to end of 2018, decline through 2019, significant drop in the first half of 2020, recovery thereafter, peak in late 2021, and moderate variability in 2022-2023.

Accounts Payable

Gradual increase over the years up to 2022 with minor adjustments, reflecting higher outstanding payables and possible changes in procurement or payment cycles.

Payables Turnover Ratio

Ranges between 10 and 13.5 since 2019, showing periods of slower and faster payment cycles but overall consistent management of payables.

The working capital exhibits notable fluctuations over the observed periods. Initially, there is a declining trend from March 2018 through December 2018, with values decreasing from 1,651 million USD to 650 million USD. This is followed by a recovery phase through 2019, where working capital stabilizes around the 1,100 to 1,600 million USD range. A significant rise occurs starting in late 2020, peaking at 2,622 million USD in June 2021, before declining sharply throughout 2022, reaching a low of 391 million USD by December 2022. There is a partial recovery in the first quarter of 2023, with working capital rising to 1,034 million USD.

Revenue trends are comparatively more stable but still reveal some variability. Revenues remain in the 2,800 to 3,100 million USD range from early 2018 to early 2019, followed by a mild dip during 2020, particularly in the second quarter at 2,255 million USD, likely reflecting external economic pressures. From mid-2020 onward, revenue demonstrates a generally upward trajectory, peaking at 3,895 million USD in the third quarter of 2022. By the first quarter of 2023, revenue slightly decreases to 3,706 million USD but remains at a level higher than earlier periods.

The working capital turnover ratio, which measures how efficiently working capital is used to generate revenue, shows considerable volatility. It is undefined or unreported for most early periods but appears from March 2019 onwards. Starting at 18.85 in March 2019, the ratio dips sharply and fluctuates in the single digits through 2020 and mid-2021, with values ranging roughly between 4.2 and 7.6. From late 2021, an upward trend is observed with substantial peaks in September 2022 (35.67) and moderate further rises in early 2023. These fluctuations suggest varying efficiency in working capital utilization over time, possibly influenced by changes in working capital levels and revenue.

Overall, the data reflect a cyclical pattern in working capital levels, significant improvement in revenue since mid-2020, and a volatile but generally improving working capital turnover ratio in recent quarters. The sharp decline in working capital during 2022, combined with elevated turnover ratios, might indicate intensified working capital management or operational shifts aimed at generating higher revenue relative to working capital.

The analysis of the inventory management metrics over the observed periods reveals several noteworthy trends.

Inventory Turnover Ratio

The inventory turnover ratio shows a generally declining trend from the first available data in March 2018 through to the most recent period in March 2023. Initial ratios were high, reaching peaks above 50 in mid to late 2018 and early 2019, indicating a rapid turnover of inventory during that timeframe. After this peak, there is a visible gradual decrease, with some fluctuations, falling to the range of mid to high 30s by late 2021 and 2022.

Specifically, the ratio decreased from a high of about 55.61 in September 2018 to approximately 38.44 by March 2023, with intermediate lows near 35 in early 2021. This decline suggests that inventory turnover slowed down over time, potentially indicating either increasing inventory levels relative to sales or a reduction in sales velocity.

Average Inventory Processing Period

The average inventory processing period, measured in days, shows a modest but clear increase, moving from about 7 days in 2018 and 2019 to around 9 or 10 days in the later periods through to 2023. This reflects a lengthening in the time inventory remains before being sold or used, aligning inversely with the declining turnover ratio.

The shift from 7 days up to 10 days indicates a slower cycle of inventory management, which could point to changes in operational efficiency, inventory stocking strategies, or market demand conditions.

In summary, the data suggest a gradual slowing in inventory movement over the observed period, illustrated by the decreasing inventory turnover ratio and increasing average processing period. This pattern may warrant further investigation into the causes, which could include altered sales patterns, supply chain issues, or strategic inventory management decisions.

The analysis of the receivables turnover ratio and the average receivable collection period for the observed quarters reveals several notable trends. Initially, the receivables turnover ratio showed moderately stable values around 11 to 12 times per year from March 2018 through March 2020, indicating relatively consistent efficiency in collecting receivables during this period.

From mid-2020 onwards, a decline in the receivables turnover ratio is evident, particularly from September 2020 to September 2021, where the ratio fell to a low of 8.99. This decline suggests a decrease in the efficiency of converting receivables into cash. Correspondingly, the average receivable collection period increased during this timeframe, peaking at 41 days in December 2021. This increase in the number of days reflects a slower collection process, which might indicate challenges in cash flow or changes in credit terms offered to customers.

Following this period, a recovery trend is visible in the receivables turnover ratio, with values increasing to around 11 or higher by the end of the analyzed timeline in March 2023. The average collection period decreased correspondingly towards 32–33 days, suggesting improved efficiency in receivables management and possibly more favorable credit or collection conditions.

Receivables Turnover Ratio

Remained relatively stable (11–12) from 2018 to early 2020, declined significantly to below 9 by late 2021, then recovered to about 11 by early 2023.

Average Receivable Collection Period

Was stable around 30–33 days initially, increased to a peak of 41 days in late 2021, then decreased back to about 32 days by early 2023.

Overall, the data indicate a period of decreased efficiency in receivables collection during the mid-2020 to late 2021 period, followed by a gradual improvement toward early 2023. This pattern could reflect external economic factors impacting customer payment behaviors or internal changes in credit policy and receivables management practices.

Average inventory processing period

The average inventory processing period shows a relatively stable pattern over the analyzed timeframe. Beginning at 8 days in Q1 2019, this metric consistently remained around 7 to 10 days through Q1 2023. There is a slight upward trend noted in late 2019 and early 2020, peaking at 10 days in Q4 2020 and again in mid-2022, which may indicate a marginally slower movement of inventory during those periods. However, it decreased slightly to 8-9 days toward Q1 2023, suggesting some improvement or normalization in inventory turnover.

Average receivable collection period

The average receivable collection period exhibits more variability. Starting at 30 days in Q1 2019, it increased gradually, reaching a peak of 41 days in Q4 2021. This lengthening trend implies that receivables took longer to be collected over time, potentially impacting cash flow. After this peak, the collection period fluctuated between 32 and 39 days, ending near 33 days in Q1 2023, indicating some easing but still longer than the initial periods.

Operating cycle

The operating cycle, which combines inventory processing and receivables collection, follows a trend largely influenced by the changes in receivable collection. From approximately 38 days in Q1 2019, it increased steadily to a maximum of 50 days in Q4 2021. This suggests the company's cash conversion period lengthened substantially during this timeframe, potentially increasing working capital requirements. Subsequent quarters show a slight reduction to around 40-42 days by Q1 2023, indicating some improvement but maintaining a longer cycle than in earlier years.

The analysis of the company's payables turnover ratio and average payables payment period over the observed periods reveals several notable trends and stability in payment practices.

Payables Turnover Ratio

The ratio begins at 12.91 in the earliest reported quarter and then shows a slight decline through 2019, reaching a low of 10.21 by the end of that year, indicating slower turnover of payables in this period. From 2020 onwards, the ratio recovered and exhibited moderate fluctuations, generally ranging between 12 and 13.5. The values around 2021 and 2022 suggest a relatively stable ability to manage payables, with small variations that may reflect changes in operational or payment policies but no dramatic shifts.

Average Payables Payment Period

The average payment period data complements the turnover ratio trend. Initially, between 2018 and 2019, the period increased from 28 days to 36 days, peaking at the end of 2019, which corresponds with the lowest turnover ratio. This suggests a tendency to delay payments during that time. Following this peak, the payment period reverted to a more consistent range of 28 to 30 days from 2020 through early 2023. This narrow range indicates a disciplined and steady payment policy, maintaining a payment cycle of about one month.

Overall, the data reflects that, despite some fluctuation towards slower payables turnover and lengthened payment periods in 2019, the company has generally maintained consistent payables management, with payment periods stabilizing around 28 to 30 days in recent years. The payables turnover in these periods aligns with typical industry patterns for efficient payables processing and supplier relationship management.

Average inventory processing period

The average inventory processing period exhibits a generally stable trend over the observed quarters. Starting at 8 days in early 2019, it remains mostly within the range of 7 to 10 days throughout the period. Minor fluctuations are observed, with a slight increase around the end of 2020 and early 2022, peaking at 10 days, followed by a moderate decline to 8 or 9 days in the most recent quarters. Overall, the inventory turnover time appears consistent without significant volatility.

Average receivable collection period

The average receivable collection period shows more variability, fluctuating between 29 and 41 days. Initially near 30 days in early 2019, it rises gradually to reach a peak of 41 days in late 2021. Subsequently, a moderate decline is visible, bringing the period back into the low 30s by early 2023. This pattern suggests intermittent changes in credit collection efficiency, with longer collection times particularly noted in the 2020-2021 timeframe.

Average payables payment period

The average payables payment period remains relatively stable throughout, oscillating between 28 and 36 days. A gradual increase to approximately 33-36 days is seen during late 2018 and into 2020, after which it reverts to the 28-30 day band, maintaining this range consistently up to early 2023. The stability indicates steady payment practices, with limited extension on payment terms despite external economic factors.

Cash conversion cycle

The cash conversion cycle (CCC) demonstrates notable fluctuations, moving between 5 and 21 days. It begins close to 10 days in early 2019, drops to a low of 5 days near the end of 2020, then rises substantially to peak around 20-21 days during 2021-2022. The CCC declines again towards early 2023, reaching approximately 12-13 days. These dynamics suggest varying efficiencies in the overall working capital management, with periods of improved cash flow turnover interspersed with phases of increased cycle duration, possibly reflecting changing operational or market conditions.