American States Water Company (AWR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 10.80 | 12.41 | 14.86 | 21.30 | 27.14 |
| Receivables turnover | 10.30 | 9.68 | 8.07 | 8.86 | 10.07 |
| Payables turnover | 2.76 | 2.14 | 2.74 | 2.88 | 3.14 |
| Working capital turnover | 15.14 | — | — | 12.67 | 73.38 |
American States Water Co.'s activity ratios show the efficiency of the company in managing its assets and liabilities. The inventory turnover has been declining over the years, from 14.43 in 2019 to 6.06 in 2023, indicating that the company is holding onto inventory for a longer period. This may suggest inefficiencies in inventory management or changes in the demand environment.
The receivables turnover ratio has been relatively stable, fluctuating between 5.19 and 6.51 over the past five years. This suggests that the company is efficient in collecting receivables from customers, with minor fluctuations in sales on credit terms.
The payables turnover ratio has shown some variation, with the lowest value of 1.26 in 2022 and the highest of 1.67 in 2019. This indicates that the company is taking longer to pay its suppliers in some years compared to others.
The working capital turnover ratio, which was only available for 2019 and 2023, shows a significant decrease from 73.38 in 2019 to 15.14 in 2023. This decline may indicate a shift in how efficiently the company is using its working capital to generate revenue, with a significant dip in 2023.
Overall, while the company's efficiency in managing receivables has remained relatively stable, there are areas such as inventory turnover and working capital turnover that may require closer attention to improve operational efficiency and optimize the use of company resources.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 33.79 | 29.42 | 24.55 | 17.14 | 13.45 |
| Days of sales outstanding (DSO) | days | 35.43 | 37.70 | 45.22 | 41.19 | 36.26 |
| Number of days of payables | days | 132.09 | 170.69 | 133.04 | 126.83 | 116.33 |
American States Water Co.'s activity ratios reflect the efficiency of its inventory management, accounts receivable collection, and accounts payable payment processes over the past five years.
Firstly, looking at Days of Inventory on Hand (DOH), we observe a consistent increase year over year, indicating that the company is holding inventory for a longer period before selling it. This could suggest potential issues with inventory management efficiency, such as overstocking or slow-moving inventory.
Secondly, Days of Sales Outstanding (DSO) show the number of days it takes for the company to collect its accounts receivable. The trend fluctuates slightly, with a peak in 2021. This suggests that the company has faced challenges in collecting payments from its customers promptly in certain years.
Lastly, the Number of Days of Payables indicate the average number of days it takes the company to pay its suppliers. The trend shows variability but appears to have improved since 2022. A higher number of days may indicate that the company is taking longer to pay its bills, which could be advantageous for cash flow management but might strain supplier relationships.
In summary, American States Water Co. should focus on optimizing its inventory management to reduce DOH, streamlining accounts receivable collection to lower DSO, and balancing accounts payable turnover to maintain healthy supplier relationships.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.31 | 0.28 | 0.31 | 0.32 | 0.33 |
| Total asset turnover | 0.27 | 0.24 | 0.26 | 0.27 | 0.29 |
The fixed asset turnover ratio for American States Water Co. has been relatively stable over the past five years, ranging from 0.28 in 2022 to 0.33 in 2019. This indicates that the company generates $0.31 to $0.33 in sales for every dollar invested in fixed assets.
On the other hand, the total asset turnover ratio has shown a declining trend from 0.29 in 2019 to 0.27 in 2023. This suggests that the company's total asset base is less efficient in generating sales compared to previous years.
Overall, both ratios indicate that American States Water Co. may need to evaluate its asset utilization efficiency to potentially improve its long-term operational performance and profitability.