American States Water Company (AWR)

Short-term

Turnover ratios

Activity ratios measure how efficiently a company is managing its assets to generate sales or revenue. Let's analyze the activity ratios of American States Water Company based on the provided data:

1. Inventory Turnover: This ratio assesses how many times a company sells and replaces its inventory during a specific period. American States Water Company's inventory turnover has been gradually declining from 21.76 in March 2020 to 11.77 in December 2024. The decreasing trend may indicate slower sales relative to the inventory on hand, which could lead to potential liquidity issues or obsolete inventory concerns.

2. Receivables Turnover: Receivables turnover shows how quickly a company collects payments from its customers. American States Water Company experienced fluctuations in its receivables turnover over the years, with significant variations between periods. The ratio ranged from a low of 8.07 in December 2021 to a high of 25.52 in March 2023. A higher receivables turnover indicates that the company efficiently collects payments from customers, while a lower ratio may suggest credit risk or collection problems.

3. Payables Turnover: Payables turnover measures how efficiently a company manages its accounts payable by paying suppliers. American States Water Company maintained a relatively stable payables turnover ratio, ranging from 1.90 in December 2022 to 3.67 in March 2020. A higher payables turnover ratio usually indicates a shorter payment period to suppliers, potentially signaling strong supplier relations or effective working capital management.

4. Working Capital Turnover: This ratio reflects the efficiency of utilizing working capital to generate sales. American States Water Company had varying values for working capital turnover, with some periods showing "—" indicating negative working capital or incomplete data. Notably, the ratio spiked to 84.08 in March 2021, signifying a period of efficient utilization of working capital to drive sales. However, the data gaps in certain periods limit a comprehensive analysis of this metric.

In conclusion, American States Water Company's activity ratios demonstrate fluctuating efficiency in managing inventory, receivables, payables, and working capital over the analyzed periods. A deeper investigation into the reasons behind these fluctuations would be necessary to assess the implications for the company's operational and financial performance.

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Average number of days

Based on the provided data, we can analyze the activity ratios of American States Water Company over the past several years.

1. Days of Inventory on Hand (DOH):
- DOH measures how many days, on average, a company holds its inventory before selling it.
- American States Water Company's DOH has generally shown an increasing trend from 16.77 days on March 31, 2020, to 31.01 days on December 31, 2024.
- The increasing trend in DOH indicates that the company is taking longer to sell its inventory, which may tie up more of its capital in inventory holdings.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for a company to collect revenue after making a sale.
- American States Water Company's DSO has fluctuated over the years, with peaks and troughs.
- The DSO ranged from 14.30 days on March 31, 2023, to 45.22 days on December 31, 2021.
- A lower DSO is generally favorable as it indicates faster cash collection and efficient credit management.

3. Number of Days of Payables:
- This ratio measures how long it takes for a company to pay its suppliers.
- American States Water Company's payables days have shown some variations, ranging from 99.40 days on March 31, 2020, to 181.48 days on December 31, 2024.
- Increasing payables days suggest that the company is taking longer to pay its suppliers, which can sometimes be a sign of financial strain or negotiation leverage with suppliers.

In conclusion, the analysis of American States Water Company's activity ratios indicates trends that may reflect the company's inventory management, accounts receivable collection efficiency, and supplier payment practices. Monitoring these ratios over time can provide insights into the company's operational efficiency and financial health.

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Long-term

The Fixed Asset Turnover ratio for American States Water Company has been gradually decreasing over the reporting periods, indicating that the company is generating fewer revenues from its fixed assets. This could suggest inefficiencies in utilizing its long-term assets to generate sales.

On the other hand, the Total Asset Turnover ratio has also shown a declining trend over the periods, implying that the efficiency in generating sales from all assets, both long-term and short-term, has been decreasing.

Overall, the decreasing trend in both the Fixed Asset Turnover and Total Asset Turnover ratios may indicate potential concerns regarding the company's ability to effectively utilize its assets to generate revenue. Further analysis and investigation into the company's operational efficiency and asset management practices may be warranted to address these declining ratios.