Eversource Energy (ES)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 10.92 | 4.32 | 4.87 | 4.38 | 5.79 |
| Receivables turnover | 8.32 | 8.10 | 8.04 | 7.45 | 8.62 |
| Payables turnover | 2.96 | 0.76 | 0.78 | 0.85 | 1.19 |
| Working capital turnover | — | — | — | — | — |
Eversource Energy's activity ratios provide insights into how efficiently the company manages its assets and liabilities. The inventory turnover ratio has been fluctuating over the past five years, ranging from 10.19 to 13.39. This ratio indicates how many times a company sells and replaces its inventory within a given period, with higher values suggesting efficient inventory management.
The receivables turnover ratio has shown a relatively stable trend, fluctuating between 6.86 and 7.29. This ratio reflects how quickly Eversource Energy collects its accounts receivables, with a higher ratio indicating a shorter collection period.
The payables turnover ratio has also exhibited variability, with values ranging from 2.02 to 2.76. This ratio indicates how quickly the company pays its suppliers, with a higher ratio suggesting a shorter payment period.
Unfortunately, the data for the working capital turnover ratio is missing for all years, making it impossible to analyze how efficiently Eversource Energy utilizes its working capital to generate revenue.
Overall, Eversource Energy’s activity ratios suggest that the company effectively manages its inventory, accounts receivables, and payables, which is essential for maintaining operational efficiency and financial health.
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 | 33.43 | 84.54 | 75.02 | 83.30 | 63.04 |
| Days of sales outstanding (DSO) | days | 43.87 | 45.06 | 45.37 | 49.02 | 42.35 |
| Number of days of payables | days | 123.17 | 477.32 | 468.99 | 429.85 | 307.26 |
Activity ratios provide insight into how efficiently a company manages its assets and operations. Let's analyze Eversource Energy's activity ratios over the past five years:
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuation, ranging from a low of 27.25 days in 2022 to a high of 35.83 days in 2023.
- Lower DOH values typically indicate that inventory is sold quickly, while higher values may suggest slow turnover or excess inventory.
- Overall, Eversource Energy's DOH has varied, suggesting potential changes in inventory management efficiency.
2. Days of Sales Outstanding (DSO):
- The DSO trend demonstrates variability over the years, with a peak of 58.57 days in 2020 and a low of 50.10 days in 2019.
- A lower DSO indicates that the company collects revenue more quickly from customers, while a higher DSO may signal issues with accounts receivable collection.
- Eversource Energy's DSO has shown some fluctuation, reflecting varying payment collection efficiency over time.
3. Number of Days of Payables:
- The days of payables trend reveals fluctuations, with a notable increase from 137.81 days in 2019 to 180.99 days in 2021, followed by a decrease in 2023 to 132.01 days.
- A higher number of days of payables implies that the company takes longer to pay its suppliers, potentially indicating improved cash flow management.
- Eversource Energy's days of payables have shown changes, indicating alterations in the company's payment practices and relationships with suppliers.
In summary, the analysis of Eversource Energy's activity ratios highlights fluctuations in inventory management, accounts receivable collection, and accounts payable practices over the past five years. These trends suggest evolving efficiencies and challenges in the company's operational activities that may impact overall financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | 0.34 | 0.30 | 0.29 | 0.31 |
| Total asset turnover | 0.21 | 0.23 | 0.20 | 0.19 | 0.21 |
The fixed asset turnover ratio for Eversource Energy has shown a decreasing trend over the past five years, indicating that the company is generating less revenue per dollar invested in fixed assets. This trend suggests that the efficiency of utilizing fixed assets to generate sales has been gradually decreasing.
On the other hand, the total asset turnover ratio has also exhibited a declining pattern over the same period. This implies that the company has been generating less revenue per dollar of total assets, indicating a decrease in the overall efficiency of asset utilization in generating sales.
Overall, the decreasing trends in both fixed asset turnover and total asset turnover ratios for Eversource Energy suggest a decline in operational efficiency in utilizing assets to generate revenue. This may warrant further analysis to understand the underlying reasons for the decreasing efficiency and potential strategies to improve asset utilization and revenue generation in the future.