The AES Corporation (AES)

Short-term

Turnover ratios

The inventory turnover ratio for The AES Corporation has shown some fluctuations over the years, indicating how efficiently the company is managing its inventory. The ratio decreased from 15.11 in 2020 to 9.54 in 2022 before increasing to 16.80 in 2024, suggesting that the company's inventory management improved significantly in 2024.

The receivables turnover ratio measures how effectively the company is collecting its accounts receivable. The ratio showed a slight increase from 6.72 in 2020 to 8.44 in 2023, indicating that the company improved its collection efficiency during this period.

The payables turnover ratio reflects how quickly a company is paying its suppliers. The ratio fluctuated over the years, decreasing from 7.31 in 2021 to 4.62 in 2023 and then increasing to 6.02 in 2024. The lower ratio in 2023 suggests potential delays in payments to suppliers that were then rectified in 2024.

The working capital turnover ratio measures the efficiency of the company in generating revenue from its working capital. The ratio was significantly high in 2020 at 185.77, but then dropped to 17.85 in 2021 and further declined to 10.95 in 2022. However, data for 2023 and 2024 is not available. This declining trend in the working capital turnover ratio reflects potential inefficiencies or changes in the company's operating cycle during these years.

In summary, while there were fluctuations in activity ratios over the years, a trend of improvement in inventory turnover and receivables turnover ratios can be observed, indicating better efficiency in managing inventory and collecting receivables. The payables turnover ratio also showed some volatility, while the working capital turnover ratio declined over the years.

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Average number of days

The activity ratios of The AES Corporation provide insights into how efficiently the company manages its inventory, collects receivables, and pays its payables.

1. Days of Inventory on Hand (DOH):
- The company's DOH has shown fluctuations over the years, ranging from a low of 21.72 days in December 2024 to a high of 38.24 days in December 2022.
- A decreasing trend in DOH indicates that the company is able to sell its inventory quickly, which is a positive sign for liquidity and operational efficiency.
- However, a significant increase in DOH, as seen in December 2022, may suggest potential issues with inventory management or slowing sales.

2. Days of Sales Outstanding (DSO):
- The DSO of The AES Corporation ranged from 43.25 days in December 2023 to 55.14 days in December 2022.
- A decreasing DSO implies that the company is collecting receivables more quickly, improving cash flow and reducing credit risk.
- In contrast, an increasing DSO, as seen in December 2022, could indicate problems with customer credit or collection practices.

3. Number of Days of Payables:
- The number of days of payables for The AES Corporation varied from 49.92 days in December 2021 to 78.97 days in December 2023.
- A lower number of days of payables suggests that the company is paying its suppliers more quickly, potentially benefiting from discounts or maintaining good relationships.
- Conversely, a higher number of days of payables, such as in December 2023, may indicate liquidity issues or strained supplier relationships.

Overall, analyzing these activity ratios collectively can provide a comprehensive view of The AES Corporation's operational efficiency and effectiveness in managing its working capital. Further trend analysis and comparison with industry benchmarks may help in better understanding the company's performance in these areas.

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Long-term

The AES Corporation's long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, provide insights into how efficiently the company is utilizing its assets to generate sales.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how effectively the company is generating sales from its fixed assets.
- The trend of The AES Corporation's Fixed Asset Turnover shows some fluctuations over the years:
- It increased from 0.42 in 2020 to 0.56 in 2021, indicating a better utilization of fixed assets to generate revenue.
- It remained relatively stable at around 0.55 in 2022 and 0.42 in 2023.
- There was a slight decline to 0.37 in 2024, suggesting a potential decrease in the efficiency of using fixed assets to generate sales.
- Overall, the company's ability to generate revenue from its fixed assets improved initially but showed a slight decline in the most recent year.

2. Total Asset Turnover:
- The Total Asset Turnover ratio indicates how efficiently The AES Corporation is using all its assets to generate revenue.
- The data reveals the following trends in Total Asset Turnover:
- It increased from 0.28 in 2020 to 0.34 in 2021, reflecting improved efficiency in utilizing total assets to generate sales.
- It then decreased to 0.33 in 2022 and further to 0.28 in 2023, indicating a potential decline in asset productivity.
- The ratio dropped to 0.26 in 2024, signaling a continued decrease in the efficiency of using total assets to generate revenue.
- The declining trend in Total Asset Turnover suggests that the company may be facing challenges in effectively utilizing all its assets to drive sales.

In conclusion, while the Fixed Asset Turnover ratio of The AES Corporation showed some initial improvement before declining slightly, the Total Asset Turnover ratio exhibited a consistent downward trend over the years. These ratios indicate shifts in asset efficiency and the company's ability to generate revenue from its assets. Further analysis and comparison with industry benchmarks are recommended to gain a deeper understanding of The AES Corporation's long-term activity performance.