Consolidated Edison Inc (ED)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 11.00 | 10.50 | 12.27 | 13.71 | 11.85 |
| Receivables turnover | 6.09 | 7.15 | 7.07 | 7.12 | 10.04 |
| Payables turnover | 2.91 | 2.64 | 3.58 | 3.31 | 3.58 |
| Working capital turnover | 195.51 | 9.58 | 110.29 | — | — |
The activity ratios of Consolidated Edison, Inc. provide insights into its efficiency in managing inventory, receivables, payables, and working capital turnover.
The inventory turnover ratio has shown fluctuations over the past five years but remains relatively stable, indicating that the company is managing its inventory efficiently. A higher turnover ratio suggests that the company is selling its inventory quickly, which is generally a positive sign.
The receivables turnover ratio has also varied over the years, with a decreasing trend. A lower receivables turnover ratio could imply that the company is taking longer to collect payments from its customers, potentially impacting its cash flow and liquidity.
The payables turnover ratio has shown a decreasing trend over the years, suggesting that the company is taking longer to pay its suppliers. This could have implications for the company's relationships with suppliers and its working capital management.
The working capital turnover ratio, although missing data for some years, shows a significant increase from 9.58 in 2022 to 195.51 in 2023. This sharp increase could indicate an improvement in the company's efficiency in utilizing its working capital to generate revenue.
In summary, while the inventory turnover ratio reflects efficient inventory management, the decreasing trend in receivables turnover and payables turnover ratios may warrant further investigation into the company's cash flow and working capital management practices. The substantial increase in the working capital turnover ratio suggests that the company may have made positive changes in its working capital management from 2022 to 2023.
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 | 33.19 | 34.78 | 29.74 | 26.62 | 30.80 |
| Days of sales outstanding (DSO) | days | 59.89 | 51.06 | 51.62 | 51.27 | 36.34 |
| Number of days of payables | days | 125.63 | 138.18 | 101.88 | 110.30 | 101.84 |
Activity ratios like days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables provide insights into how efficiently Consolidated Edison, Inc. manages its inventory, accounts receivable, and accounts payable.
1. Days of inventory on hand (DOH): This ratio measures how many days, on average, the company holds its inventory before it is sold. A lower DOH indicates efficient inventory management. Over the past five years, Consolidated Edison has shown fluctuations in its DOH, with the lowest being in 2022 (44.01 days) and the highest in 2021 (57.92 days). The increase in 2021 could suggest that the company had challenges in managing its inventory levels efficiently that year.
2. Days of sales outstanding (DSO): DSO shows the average number of days it takes for the company to collect payments after making a sale. A lower DSO is favorable as it indicates faster collection of accounts receivable. Consolidated Edison's DSO has varied over the years, with a significant increase in 2023 (94.29 days) compared to 2022 (75.28 days). This rise could signal potential issues with collecting payments promptly from customers in the most recent year.
3. Number of days of payables: This ratio reflects the average number of days the company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to settle its payables. Consolidated Edison's number of days of payables has fluctuated, notably decreasing in 2020 (161.36 days) and increasing in 2021 (198.40 days). The decrease in 2020 suggests more prompt payment to suppliers, possibly to maintain good relationships or take advantage of discounts.
Overall, analyzing Consolidated Edison, Inc.'s activity ratios provides a comprehensive view of its operational efficiency in managing inventory, accounts receivable, and accounts payable over the past five years. By addressing any issues highlighted by these ratios, the company can work towards improving its overall financial performance and competitiveness in the market.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.30 | 0.34 | 0.28 | 0.26 | 0.29 |
| Total asset turnover | 0.22 | 0.23 | 0.22 | 0.19 | 0.22 |
Consolidated Edison, Inc.'s long-term activity ratios suggest efficiency in managing its assets over the years. The fixed asset turnover ratio has seen fluctuations but generally remained within a range indicating the company generates $0.26 to $0.34 in revenue for every dollar invested in fixed assets. This implies some variability in how efficiently the company is utilizing its long-term assets to generate sales.
Moreover, the total asset turnover ratio reflects how effectively the company generates revenue from all its assets, including both fixed and current assets. Despite minor fluctuations, the ratio has consistently been around 0.22, indicating that for every dollar invested in total assets, the company generates approximately $0.22 in revenue. This signifies a stable performance in utilizing its overall asset base to generate sales across the years.
Overall, while there have been some slight variations, the long-term activity ratios of Consolidated Edison, Inc. indicate a reasonable level of efficiency in converting its long-term assets into revenue over the past five years.