American Water Works (AWK)

Short-term

Turnover ratios

The activity ratios of American Water Works Co. Inc. provide insights into how efficiently the company is managing its operations.

1. Inventory turnover: The company has consistently shown an inventory turnover ratio of 0.00 over the past five years. This suggests that American Water Works Co. Inc. either does not hold significant inventory or operates with a very low level of inventory turnover.

2. Receivables turnover: The receivables turnover ratio has been relatively stable over the years, ranging from 6.23 to 7.75. This indicates that the company is efficient in collecting payment from its customers, with an average of approximately 7 times a year.

3. Payables turnover: The payables turnover ratio has consistently been at 0.00 for the last five years. This may suggest that American Water Works Co. Inc. pays off its creditors at a relatively slower pace or has low trade payables.

4. Working capital turnover: Data for the working capital turnover ratio is not provided for any of the years listed. Without this information, it is difficult to assess how effectively the company is utilizing its working capital to generate sales.

Overall, based on the activity ratios provided, American Water Works Co. Inc. appears to be effectively managing its receivables but may have room for improvement in terms of inventory and payables management.

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Average number of days

Based on the provided data for American Water Works Co. Inc., the Days of Sales Outstanding (DSO) ratio fluctuated over the last five years. In 2023, DSO decreased to 55.26 days from 58.62 days in 2022, indicating an improvement in the company's ability to collect receivables efficiently. However, compared to 2021 and 2019, DSO was higher in 2023, suggesting a slight delay in collecting payments from customers.

The absence of data for Days of Inventory on Hand (DOH) and Number of Days of Payables limits the comprehensive analysis of American Water Works Co. Inc.'s activity ratios. DOH provides insights into how efficiently the company manages its inventory, while the Number of Days of Payables measures the average time it takes the company to pay its suppliers.

In conclusion, while the improvement in DSO in 2023 is a positive sign, a more detailed analysis incorporating all activity ratios, including DOH and Payables, would provide a more complete assessment of American Water Works Co. Inc.'s operational efficiency and working capital management.

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Long-term

The fixed asset turnover ratio for American Water Works Co., Inc. has been relatively stable over the past five years, ranging from 0.16 to 0.20. This ratio indicates that for every dollar invested in fixed assets, the company generated only around $0.16 to $0.20 in sales. The lower fixed asset turnover suggests that the company may be less efficient in utilizing its fixed assets to generate revenue.

Similarly, the total asset turnover ratio has also remained relatively consistent, hovering around 0.14 to 0.16 over the same period. This ratio indicates that for every dollar worth of total assets, the company generated sales of only around $0.14 to $0.16. A lower total asset turnover ratio may indicate that the company is less efficient in utilizing all its assets (both fixed and current) to generate revenue.

Overall, both the fixed asset turnover and total asset turnover ratios for American Water Works Co., Inc. suggest that the company may need to improve its asset utilization efficiency to generate more revenue from its asset base. Continued monitoring and potential improvements in asset management practices could help enhance the company's operational efficiency and financial performance in the long term.