CMS Energy Corporation (CMS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.12 | 1.21 | 1.52 | 1.43 | 1.47 |
| Receivables turnover | 15.78 | 3.83 | 5.13 | 4.03 | 4.27 |
| Payables turnover | — | 1.46 | 1.16 | 1.25 | 1.43 |
| Working capital turnover | — | 19.19 | 17.33 | — | — |
CMS Energy Corporation's inventory turnover has gradually decreased from 4.68 in 2019 to 3.11 in 2023, indicating a decrease in the efficiency of inventory management. The receivables turnover ratio shows an improving trend, increasing from 7.58 in 2019 to 7.90 in 2023, suggesting the company is collecting its receivables more efficiently over the years.
On the other hand, the payables turnover ratio has fluctuated over the years, with a drop from 4.46 in 2019 to 3.60 in 2023. This may indicate a change in payment terms with suppliers.
The working capital turnover was significantly high in 2022 and 2021, indicating the company efficiently utilized its working capital to generate revenue during those years. However, there is missing data for this ratio in 2020 and 2013, making it difficult to assess the trend accurately based on the available information.
Overall, while there are fluctuations in the activity ratios, there is a mixed performance in inventory, receivables, payables turnover, and working capital turnover, which should be further analyzed to understand the underlying factors influencing these trends.
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 | 326.07 | 300.45 | 240.33 | 255.15 | 247.84 |
| Days of sales outstanding (DSO) | days | 23.14 | 95.24 | 71.17 | 90.65 | 85.52 |
| Number of days of payables | days | — | 249.61 | 315.28 | 292.80 | 254.80 |
Days of inventory on hand (DOH) measures how many days, on average, a company holds onto its inventory before selling it. CMS Energy Corporation's DOH has been increasing over the years, indicating that the company is holding onto inventory for a longer period before converting it into sales.
Days of sales outstanding (DSO) reflects the average number of days it takes for a company to collect revenue after a sale is made. CMS Energy Corporation's DSO has fluctuated over the years, with a significant decrease in 2022 followed by an increase in 2023. This may suggest changes in the company's credit policies or the efficiency of its accounts receivable management.
Number of days of payables indicates the average number of days a company takes to pay its suppliers. CMS Energy Corporation's number of days of payables has been volatile, with fluctuations observed over the years. A higher number of days of payables could indicate that the company is taking longer to pay its suppliers, which may affect its relationships with vendors.
Overall, CMS Energy Corporation's activity ratios show trends that may reflect changes in its inventory management, accounts receivable collection, and payment practices with suppliers. It is essential for the company to monitor and manage these ratios effectively to ensure optimal operational efficiency and cash flow management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.30 | 0.38 | 0.33 | 0.31 | 0.35 |
| Total asset turnover | 0.22 | 0.27 | 0.25 | 0.22 | 0.25 |
The long-term activity ratios of CMS Energy Corporation, as indicated by the fixed asset turnover and total asset turnover, have shown fluctuations over the past five years. The fixed asset turnover, which measures the efficiency of utilizing fixed assets to generate revenue, decreased from 0.36 in 2019 to 0.30 in 2023, suggesting a decline in the company's ability to generate sales from its fixed assets.
Similarly, the total asset turnover, reflecting the company's overall efficiency in utilizing all assets to generate revenue, exhibited a downward trend from 0.26 in 2019 to 0.22 in 2023. This indicates that CMS Energy Corporation has become less effective in generating sales relative to its total assets over the years.
These declining trends in both fixed asset turnover and total asset turnover ratios may raise concerns about the company's operational efficiency and asset utilization. It could signify potential inefficiencies or underperformance in converting its assets into revenue, which may require further analysis and strategic adjustments to enhance operational effectiveness and profitability in the long term.