American Water Works (AWK)

Days of sales outstanding (DSO)

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Receivables turnover		6.15	5.85	5.82	6.46	5.80	5.47	5.32	5.51	5.24	7.22	6.86	8.92	9.01	6.57	6.91	7.75	7.18	6.66	7.25	7.84
DSO	days	59.35	62.41	62.75	56.54	62.95	66.73	68.56	66.27	69.72	50.53	53.20	40.94	40.51	55.56	52.85	47.11	50.81	54.79	50.32	46.57

December 31, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 6.15
= 59.35

Based on the provided data, the days of sales outstanding (DSO) for American Water Works has fluctuated over the years. The DSO indicates the average number of days it takes for the company to collect revenue after making a sale.

From March 31, 2020, to December 31, 2024, the DSO ranged from a low of 40.51 days to a high of 69.72 days. Generally, a lower DSO suggests that the company is efficient in collecting revenue from its customers, while a higher DSO may indicate potential issues with accounts receivable management or customer payment delays.

Key observations include a decrease in DSO from December 31, 2021 (40.51 days) to March 31, 2022 (40.94 days) followed by a gradual increase until reaching 68.56 days by June 30, 2023. This steep increase may warrant further investigation into the company's credit policies and collection processes.

The DSO then dropped to 56.54 days by March 31, 2024, indicating some improvement in accounts receivable management. However, it increased again to 62.75 days by June 30, 2024, and remained relatively stable around the 60-day mark in the following periods.

Overall, American Water Works should continue to monitor its DSO closely to ensure efficient cash flow management and timely collection of receivables to maintain financial stability and liquidity.