CenterPoint Energy Inc (CNP)

Short-term

Turnover ratios

Centerpoint Energy Inc.'s activity ratios provide insights into the efficiency of the company in managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
The inventory turnover ratio measures how many times a company sells and replaces its inventory in a given period. Centerpoint Energy Inc.'s inventory turnover has been fluctuating over the years, with a notable decrease from 10.46 in 2019 to 2.81 in 2023. This implies that the company is selling and replacing its inventory at a slower rate in recent years, which could indicate potential issues related to inventory management or changes in demand.

2. Receivables Turnover:
The receivables turnover ratio indicates how efficiently a company collects cash from its credit sales. Centerpoint Energy Inc. has shown a generally increasing trend in receivables turnover, from 6.34 in 2019 to 6.59 in 2023. This suggests that the company has been collecting its receivables more effectively over time, improving its cash flow and reducing the risk of bad debts.

3. Payables Turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. Centerpoint Energy Inc.'s payables turnover has fluctuated over the years, indicating varying payment practices. The decrease in payables turnover from 5.02 in 2019 to 2.36 in 2023 suggests that the company is taking longer to pay its suppliers, which could impact its relationships with vendors or cash flow management.

4. Working Capital Turnover:
Unfortunately, there is missing data for Centerpoint Energy Inc.'s working capital turnover for most years, making it challenging to assess the company's efficiency in utilizing its working capital effectively to generate sales. This highlights the importance of having complete and consistent data to analyze this aspect of the company's operations.

In summary, while Centerpoint Energy Inc. has displayed positive trends in receivables turnover, there are fluctuations in its inventory and payables turnover ratios that may warrant further examination to address any underlying issues affecting the company's operational efficiency.

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Average number of days

Centerpoint Energy Inc.'s activity ratios provide insights into the efficiency of the company's operations. Let's analyze each ratio:

1. Days of Inventory on Hand (DOH):
- Centerpoint Energy's average days of inventory on hand increased from 34.89 days in 2019 to 130.12 days in 2023.
- This indicates that the company is holding inventory for a longer period, which may tie up capital and impact cash flow.

2. Days of Sales Outstanding (DSO):
- The number of days of sales outstanding fluctuated over the past five years, with a peak of 65.51 days in 2022 and a low of 52.62 days in 2021.
- A lower DSO suggests that the company is collecting sales revenue more quickly, improving cash flow and liquidity.

3. Number of Days of Payables:
- Centerpoint Energy's days of payables have been increasing steadily, from 72.72 days in 2019 to 154.96 days in 2023.
- A longer payment period may indicate that the company is managing its cash flow by delaying payment to suppliers.

Overall, Centerpoint Energy's activity ratios show a mixed performance in managing its inventory, accounts receivable, and accounts payable. The company may need to focus on optimizing its inventory levels and managing its working capital effectively to enhance operational efficiency and financial performance.

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Long-term

Centerpoint Energy Inc.'s long-term activity ratios indicate how efficiently the company is utilizing its assets to generate revenue. Looking at the fixed asset turnover ratio, we observe a downward trend from 0.59 in 2019 to 0.29 in 2023. This suggests that the company is generating less revenue from its fixed assets over time, which could be a concern as it may indicate inefficiency in utilizing these long-term assets.

In contrast, the total asset turnover ratio remained relatively stable around 0.22 in the past five years, indicating that the company is consistently generating revenue relative to its total assets. However, the low total asset turnover ratio compared to industry peers could indicate that Centerpoint Energy Inc. may have excessive total assets on its balance sheet relative to the revenue it generates.

Overall, the declining trend in fixed asset turnover and the relatively low total asset turnover ratio may warrant further investigation into the company's asset management strategies and efficiency in utilizing its long-term assets to drive revenue growth.