Chesapeake Utilities Corporation (CPK)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate sales. Let’s analyze Chesapeake Utilities Corporation's activity ratios based on the provided data:

1. Inventory Turnover:
- Chesapeake Utilities Corporation's inventory turnover has been relatively stable, ranging from 14.21 to 54.60 over the years.
- The decreasing trend from 2022 to 2024 indicates a potential issue with managing inventory efficiently.
- A high inventory turnover ratio suggests that Chesapeake Utilities is selling its products quickly, while a low ratio could indicate overstocking or slow sales.

2. Receivables Turnover:
- The data does not include receivables turnover information, which indicates that the company’s performance in collecting outstanding receivables from customers is not explicitly provided.
- Receivables turnover ratio is crucial as it reflects the effectiveness of the company in collecting payments from its credit sales.

3. Payables Turnover:
- Similar to receivables turnover, payables turnover data is not available, making it challenging to assess how efficiently Chesapeake Utilities pays off its liabilities to suppliers.
- A higher payables turnover ratio suggests more efficient management of payables, while a lower ratio could indicate potential liquidity issues or strained relationships with suppliers.

4. Working Capital Turnover:
- The data provided does not include working capital turnover information, which could have shed light on how effectively Chesapeake Utilities utilizes its working capital to generate sales.
- This ratio is essential for evaluating the company's operational efficiency in using its current assets and liabilities.

In conclusion, while the inventory turnover indicates the efficiency of Chesapeake Utilities in managing its inventory levels and sales, the lack of information on receivables turnover, payables turnover, and working capital turnover limits a comprehensive analysis of the company's overall activity ratios. It would be beneficial to have additional data to assess the company's effectiveness in managing its working capital, collecting receivables, and paying off payables.

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Average number of days

The activity ratios for Chesapeake Utilities Corporation reflect the efficiency of the company in managing its operating cycle.

1. Days of Inventory on Hand (DOH): The average number of days it takes for the company to sell its inventory has been increasing slightly over the past few years, from around 11 days at the beginning of 2020 to a peak of 25.68 days at the end of 2023 before dropping to 6.68 days by the end of 2024. This trend suggests a potential issue with inventory management efficiency in earlier years, which seems to have been addressed in the latter period, resulting in a significant decrease by the end of 2024.

2. Days of Sales Outstanding (DSO): The data provided does not include information on Days of Sales Outstanding, which is a measure of how long it takes for the company to collect payments from its customers. Without this information, it is challenging to assess the efficiency of the company in collecting its accounts receivable.

3. Number of Days of Payables: The data also lacks information on the Number of Days of Payables, which indicates how long it takes the company to pay its suppliers. This ratio is essential for understanding the company's payment practices and cash flow management.

Overall, based on the information provided, it appears that Chesapeake Utilities Corporation has demonstrated an improvement in managing its inventory more efficiently over the years, as indicated by the declining trend in the Days of Inventory on Hand. However, a more comprehensive analysis including Days of Sales Outstanding and Number of Days of Payables would provide a more complete picture of the company's operational efficiency.

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Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its long-term assets to generate sales.

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how effectively a company is using its fixed assets to generate revenue. Chesapeake Utilities Corporation's fixed asset turnover ratio fluctuated between 0.30 and 0.38 from December 2020 to June 2023, indicating moderate efficiency in utilizing its fixed assets. However, a significant spike in the ratio to 11.41 in September 2022 suggests a sudden and drastic increase in revenue generation from fixed assets, potentially due to operational changes or one-time events.

2. Total Asset Turnover: The total asset turnover ratio indicates the company's ability to generate sales from its total assets. Chesapeake Utilities Corporation's total asset turnover ratio ranged from 0.20 to 0.31 between December 2023 and March 2023. A lower ratio in the last reported period could suggest underutilization of total assets in revenue generation.

Overall, while the fixed asset turnover ratio showed fluctuations with a notable anomaly in September 2022, the total asset turnover ratio exhibited a declining trend towards the end of the period. It is essential for the company to improve efficiency in utilizing its long-term assets effectively to enhance overall operational performance and profitability.