CenterPoint Energy Inc (CNP)

Short-term

Turnover ratios

1. Inventory Turnover:
- The inventory turnover ratio of CenterPoint Energy Inc has seen a slight decline from 8.98 in 2020 to 6.54 in 2024. This indicates that the company is selling its inventory less frequently over the years.
- A high inventory turnover ratio is generally seen as positive as it signifies efficient management of inventory levels, but the decreasing trend may warrant a closer look at inventory management practices.

2. Receivables Turnover:
- The receivables turnover ratio data is missing for all years provided, indicating that there is a lack of information to determine how quickly the company is collecting on its receivables.
- Receivables turnover is an important metric for assessing how efficiently a company is collecting outstanding payments from its customers. The absence of this data limits insight into the company's accounts receivable management.

3. Payables Turnover:
- Similar to receivables turnover, payables turnover data is not available for any of the years in question. Payables turnover ratio helps in understanding how quickly a company is paying its suppliers.
- Without this data, it is challenging to evaluate the efficiency of CenterPoint Energy Inc in managing its accounts payable.

4. Working Capital Turnover:
- The working capital turnover ratio for CenterPoint Energy Inc shows significant fluctuations, from not reported in 2020 to 25.72 in 2024. Such a high ratio in 2024 indicates the company is generating substantial revenue relative to its working capital.
- A high working capital turnover ratio can suggest effective utilization of resources in generating sales, but the drastic change from 2021 to 2024 warrants a closer examination of the company's working capital management strategies.

In conclusion, while the inventory turnover provides some insight into the company's inventory management efficiency, the absence of data for receivables turnover and payables turnover limits a comprehensive analysis of CenterPoint Energy Inc's activity ratios. The significant increase in working capital turnover from 2021 to 2024 is a notable point for further investigation into the company's operational efficiency and capital utilization.

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Average number of days

CenterPoint Energy Inc's activity ratios show the efficiency of its operations in managing inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The DOH has been gradually increasing over the years, from 40.65 days in 2020 to 55.84 days in 2024.
- This indicates that CenterPoint Energy is holding onto its inventory for a longer period, which may imply slower inventory turnover or potential issues in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The data does not provide information on DSO for any of the years, suggesting that the company may not track the average number of days it takes to collect payment from customers.
- Without this information, it is challenging to assess the efficiency of CenterPoint Energy in collecting receivables and managing its working capital.

3. Number of Days of Payables:
- Similarly, there is no information available about the number of days of payables for the years provided.
- The lack of data on payables turnover restricts the evaluation of the company's payment terms with suppliers and its ability to manage and optimize cash flow through the payment cycle.

In conclusion, while the DOH ratio indicates a potential issue with inventory management, the absence of data on DSO and payables turnover limits a comprehensive assessment of CenterPoint Energy Inc's overall activity ratios and efficiency in managing working capital.

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Long-term

CenterPoint Energy Inc's long-term activity ratios provide insights into how efficiently the company utilizes its assets to generate sales.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively a company generates revenue from its fixed assets.
- CenterPoint Energy's fixed asset turnover ratio has been relatively stable over the years, ranging from 0.33 to 0.36.
- A higher fixed asset turnover ratio indicates better efficiency in utilizing fixed assets to generate revenues, whereas a lower ratio may suggest underutilization or overinvestment in fixed assets.
- CenterPoint Energy's fixed asset turnover ratios are relatively low, indicating that the company may not be efficiently utilizing its fixed assets to generate sales.

2. Total Asset Turnover:
- The total asset turnover ratio shows how efficiently a company uses its assets to generate revenue.
- CenterPoint Energy's total asset turnover ratios have ranged from 0.20 to 0.24 over the years.
- A higher total asset turnover ratio signifies better asset utilization in generating sales, while a lower ratio may indicate inefficient use of assets.
- CenterPoint Energy's total asset turnover ratios are relatively low, which could suggest that the company may not be effectively utilizing its total assets to generate revenues.

In conclusion, based on the analysis of CenterPoint Energy Inc's long-term activity ratios, the company appears to have lower asset turnover ratios, both in terms of fixed assets and total assets. This may indicate potential inefficiencies in asset utilization and could be an area for improvement to enhance overall operational performance.