Atmos Energy Corporation (ATO)

Short-term

Turnover ratios

The activity ratios provide valuable insights into how efficiently Atmos Energy Corp. manages its working capital and inventory.

The inventory turnover ratio has gradually decreased from 6.31 in 2019 to 5.18 in 2023, indicating that the company takes longer to sell its inventory. This may suggest a potential issue with managing inventory levels or changes in demand for its products.

Conversely, the receivables turnover ratio has shown an increasing trend, reaching 13.01 in 2023 from 12.59 in 2019. This indicates that Atmos Energy Corp. is collecting its receivables more efficiently, possibly through improved credit policies or effective collection efforts.

The payables turnover ratio has generally been stable, fluctuating between 4.59 and 6.66 over the five-year period. This suggests that the company consistently manages its trade payables well, successfully balancing payment terms with suppliers.

Additionally, the absence of data for the working capital turnover ratio limits our ability to assess the efficiency of Atmos Energy Corp.'s use of working capital to generate sales. It may be beneficial for the company to calculate and provide this ratio in future reports for a more comprehensive analysis of its overall activity efficiency.

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Average number of days

Activity ratios provide insight into the efficiency of a company's operations and management of its working capital. Let's analyze the activity ratios of Atmos Energy Corp. over the past five years.

1. Days of Inventory on Hand (DOH):
The DOH measures the average number of days it takes for a company to sell its inventory. A lower DOH indicates efficient inventory management. Atmos Energy Corp. experienced an increasing trend in DOH from 2019 to 2022, suggesting a lengthening of the time required to sell its inventory. However, in 2023, the DOH decreased to 70.41 days, indicating an improvement in inventory turnover efficiency.

2. Days of Sales Outstanding (DSO):
The DSO measures how long it takes for a company to collect its accounts receivable. A lower DSO reflects effective credit and collection policies. Over the past five years, Atmos Energy Corp. has demonstrated a consistent improvement in DSO, with a notable decrease from 36.74 days in 2021 to 28.06 days in 2023. This reflects better management in collecting payments from customers.

3. Number of Days of Payables:
This ratio indicates the average number of days the company takes to pay its suppliers. A longer payment period can improve cash flow. Atmos Energy Corp. maintained a relatively stable number of days of payables over the years, fluctuating within a narrow range, with a slight decrease in 2023 to 54.84 days.

Overall, the decreasing trend in DSO and the relatively stable number of days of payables are positive signs, indicating more efficient management of accounts receivable and payables. Although the DOH increased from 2019 to 2022, the subsequent improvement in 2023 suggests a potential positive impact on working capital and inventory turnover.

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Long-term

The fixed asset turnover ratio for Atmos Energy Corp. has shown a slight decline over the past five years, from 0.25 in 2019 to 0.22 in 2023. This indicates that the company's ability to generate sales from its fixed assets has decreased slightly over this period.

Similarly, the total asset turnover ratio has remained relatively stable, hovering around 0.19, indicating that the company has consistently been generating sales relative to its total assets.

Overall, the long-term activity ratios suggest that Atmos Energy Corp. may need to focus on optimizing the utilization of its fixed assets to generate more sales, while maintaining its ability to generate sales relative to its total assets.