CMS Energy Corporation (CMS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.49 | 1.12 | 1.21 | 1.52 | 1.43 |
| Receivables turnover | 13.40 | 15.78 | 3.83 | 5.13 | 4.03 |
| Payables turnover | — | — | 1.46 | 1.16 | 1.25 |
| Working capital turnover | — | — | 19.19 | 17.33 | — |
CMS Energy Corporation's activity ratios provide insight into how efficiently the company is managing its assets and liabilities. Here is a detailed analysis based on the provided data:
1. Inventory Turnover: This ratio measures how many times a company's inventory is sold and replaced over a period. CMS Energy Corporation's inventory turnover has shown some fluctuations over the years, ranging from a low of 1.12 in 2023 to a high of 1.52 in 2021. An increasing trend in inventory turnover indicates that the company is effectively managing its inventory levels and converting it into sales.
2. Receivables Turnover: This ratio indicates how quickly a company collects cash from its credit sales. CMS Energy Corporation's receivables turnover has shown significant variability, with a sharp increase in 2023 to 15.78 and a decrease to 13.40 in 2024. Higher receivables turnover ratios suggest efficient management of accounts receivable and timely collection of outstanding debts.
3. Payables Turnover: Unfortunately, data on payables turnover is missing for 2023 and 2024. However, we can see that CMS Energy Corporation's payables turnover has fluctuated in the available years, with the highest being 1.46 in 2022. A higher payables turnover ratio typically indicates that the company is paying its suppliers more quickly.
4. Working Capital Turnover: The data for working capital turnover is missing for 2023 and 2024. However, we can observe that CMS Energy Corporation's working capital turnover increased from 17.33 in 2021 to 19.19 in 2022. This suggests that the company is generating more revenue relative to its working capital, indicating efficient utilization of resources.
In summary, CMS Energy Corporation has demonstrated varying levels of efficiency in managing its assets and liabilities over the years, with improvements in inventory turnover and working capital turnover. The company should continue to monitor these activity ratios to ensure optimal utilization of resources and sustainable long-term growth.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 244.71 | 326.07 | 300.45 | 240.33 | 255.15 |
| Days of sales outstanding (DSO) | days | 27.25 | 23.14 | 95.24 | 71.17 | 90.65 |
| Number of days of payables | days | — | — | 249.61 | 315.28 | 292.80 |
The activity ratios analysis for CMS Energy Corporation based on the provided data shows a pattern of fluctuation in key metrics over the five-year period.
1. Days of inventory on hand (DOH):
- The company's inventory turnover has shown variability over the years, ranging from 240.33 days to 326.07 days.
- In 2022, there was a notable increase in DOH to 300.45 days, followed by a decrease to 244.71 days in 2024.
- The trend indicates some challenges in managing inventory levels efficiently, potentially impacting the company's liquidity and profitability.
2. Days of sales outstanding (DSO):
- CMS Energy Corporation has experienced a significant reduction in DSO from 90.65 days in 2020 to 27.25 days in 2024.
- The decreasing trend in DSO signifies an improvement in the company's collection efficiency and the ability to convert sales into cash more promptly.
- The notable decrease in DSO from 2022 to 2023 suggests enhanced credit and collection policies.
3. Number of days of payables:
- The data for 2020 and 2021 indicates that the company takes longer to pay its payables, with figures of 292.80 days and 315.28 days, respectively.
- In 2022, there was a significant decrease in the number of days of payables to 249.61 days, suggesting a potential effort to negotiate more favorable payment terms with suppliers.
- The absence of data for 2023 and 2024 limits a direct comparison, but it may reflect changes in the company's payables management approach.
Overall, the analysis highlights the importance of effectively managing inventory levels, improving collections processes, and optimizing payables turnover to enhance operational efficiency and financial performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.27 | 0.30 | 0.38 | 0.33 | 0.31 |
| Total asset turnover | 0.21 | 0.22 | 0.27 | 0.25 | 0.22 |
CMS Energy Corporation's fixed asset turnover ratio has shown a fluctuating trend over the past five years. The ratio indicates the company's efficiency in generating sales revenue from its investment in fixed assets. Despite a slight increase from 0.31 in 2020 to 0.33 in 2021 and further to 0.38 in 2022, the ratio decreased in 2023 and 2024, reaching 0.30 and 0.27, respectively. This suggests that CMS Energy Corporation may be facing challenges in effectively utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio, which reflects the company's ability to generate sales from its total assets, has also exhibited a downward trend over the same period. Starting at 0.22 in 2020 and peaking at 0.27 in 2022, the ratio declined to 0.21 in 2024. This indicates a decrease in the company's overall efficiency in utilizing its assets to generate sales revenue.
Overall, these long-term activity ratios suggest that CMS Energy Corporation may be experiencing difficulties in maximizing the productivity of both its fixed and total assets to drive sales growth. Further analysis of the company's operational strategies and asset management practices may be necessary to address these efficiency challenges.