American Water Works (AWK)

Short-term

Turnover ratios

Based on the provided data, we can perform a comprehensive analysis of American Water Works's activity ratios.

1. Inventory Turnover:
Inventory turnover reflects how efficiently a company manages its inventory. American Water Works' inventory turnover has fluctuated over the years, decreasing from 0.94 in 2020 to 0.60 in 2024. A lower inventory turnover may indicate potential issues with sales, demand forecasting, or inventory management efficiency.

2. Receivables Turnover:
Receivables turnover measures how well a company collects its outstanding accounts receivable. American Water Works' receivables turnover improved from 7.17 in 2020 to 6.15 in 2024. A higher receivables turnover suggests effective credit management and timely collection of payments from customers.

3. Payables Turnover:
Payables turnover indicates how quickly a company pays its suppliers. American Water Works' payables turnover has remained relatively stable around 0.16-0.18 over the years. A higher payables turnover may indicate efficient management of trade credit and favorable payment terms with suppliers.

4. Working Capital Turnover:
The working capital turnover ratio is not provided for American Water Works in the data. This ratio typically measures how efficiently a company utilizes its working capital to generate sales. The absence of this data may limit a comprehensive analysis of the company's working capital efficiency.

In conclusion, American Water Works has shown varying levels of efficiency in managing its inventory, collecting receivables, and paying its suppliers over the years. Further analysis and comparison with industry benchmarks would provide more insights into the company's operational efficiency and financial health.

---

Average number of days

American Water Works' activity ratios indicate the efficiency of its operations and management of working capital. The Days of Inventory on Hand (DOH) increased from 389.89 days in 2020 to 606.37 days in 2024, suggesting a slower turnover of inventory over the years. This may imply issues with inventory management or a shift in the company's business model.

In terms of Days of Sales Outstanding (DSO), the company improved its collection efficiency, with DSO decreasing from 50.93 days in 2020 to 59.30 days in 2024. This indicates that American Water Works has been able to collect revenue from customers more quickly over the years, which is a positive sign for cash flow management.

The Number of Days of Payables also increased steadily from 1,567.84 days in 2020 to 2,036.94 days in 2024. This indicates that the company is taking longer to pay its suppliers, potentially leading to strained relationships or missed opportunities for early payment discounts.

Overall, while the company has improved its collection efficiency, there are indications of challenges in inventory turnover and payables management that may require closer attention to optimize working capital and overall operational efficiency.

---

Long-term

American Water Works' long-term activity ratios indicate how efficiently the company is utilizing its assets to generate revenue. The Fixed Asset Turnover ratio improved from 0.19 in 2020 to 0.22 in 2021, indicating that the company generated $0.22 in revenue for every dollar invested in fixed assets. However, the ratio decreased to 0.16 in 2022, showing a decline in the efficiency of utilizing fixed assets. In 2023 and 2024, the ratio remained relatively stable at 0.17, reflecting consistent performance in generating revenue from fixed assets.

Similarly, the Total Asset Turnover ratio increased from 0.15 in 2020 to 0.18 in 2021, demonstrating improved efficiency in generating revenue from all assets. However, from 2022 to 2024, the Total Asset Turnover ratio remained constant at 0.14, indicating a stable performance in utilizing all assets to generate revenue.

Overall, American Water Works has shown fluctuations in its efficiency in generating revenue from fixed assets but maintained a stable performance in utilizing all assets to generate revenue over the analyzed period.