Entergy Corporation (ETR)

Short-term

Turnover ratios

Entergy Corp.'s activity ratios provide insights into how efficiently the company manages its assets and liabilities.

1. Inventory Turnover:
- Entergy's inventory turnover has fluctuated over the years, ranging from 2.17 in 2020 to 3.98 in 2022. The ratio indicates that in 2023, the company turned over its inventory 2.34 times during the year, which is lower than the previous year. A lower ratio could imply inefficiencies in managing inventory levels or possibly a decrease in sales volume relative to the inventory levels.

2. Receivables Turnover:
- The receivables turnover shows how many times Entergy collects its accounts receivable during the year. In 2023, the ratio stood at 8.72, which decreased slightly from the previous year but remained relatively consistent. This indicates that Entergy is efficient in its collections and is able to convert its receivables into cash multiple times a year.

3. Payables Turnover:
- The payables turnover ratio reveals how quickly Entergy pays its suppliers. In 2023, the ratio was 2.41, showing a decrease from the previous year. This decrease could indicate that the company is taking longer to pay its suppliers, which may impact relationships or result in potential cash flow management issues.

4. Working Capital Turnover:
- The data for working capital turnover is not provided for any year, making it challenging to assess how effectively Entergy is utilizing its working capital to generate revenue.

In summary, Entergy Corp.'s activity ratios reflect various aspects of its operational efficiency. The company should pay attention to the trends in these ratios to identify areas for improvement and maintain a healthy working capital cycle.

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Average number of days

Entergy Corp.'s activity ratios provide insight into its efficiency in managing inventory, collecting receivables, and paying its payables.

1. Days of Inventory on Hand (DOH):
- The trend in the DOH ratio shows fluctuation over the past five years, indicating variability in inventory management practices.
- In 2023, Entergy had an elevated DOH of 156.06 days compared to previous years, which may suggest inefficiencies in managing inventory levels.
- A higher DOH could tie up capital in excess inventory and lead to increased carrying costs and potential obsolescence risks.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects how long it takes for Entergy to collect on its credit sales.
- The DSO has shown relatively stable performance over the years, with a slight increase in 2023 to 41.87 days.
- A low DSO is preferable as it indicates efficient credit management and timely cash collection from customers.

3. Number of Days of Payables:
- The days of payables metric demonstrates how long Entergy takes to pay its suppliers.
- There has been significant volatility in this ratio, with a sharp decrease in 2023 to 151.70 days.
- A high number of days of payables may indicate that Entergy is extending payment terms, potentially improving cash flow but also risking strained supplier relations.

Overall, Entergy Corp. should focus on optimizing its inventory levels to reduce excess holding costs, maintaining prompt collection of receivables to improve cash flow, and carefully managing payables to balance liquidity and supplier relationships.

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Long-term

The long-term activity ratios of Entergy Corp., as reflected by its fixed asset turnover and total asset turnover, have exhibited fluctuations over the past five years.

Starting with the fixed asset turnover, this ratio indicates how efficiently the company is utilizing its fixed assets to generate sales revenue. Entergy's fixed asset turnover has ranged from 0.26 to 0.32 over the last five years, with a trend towards a decline in recent years. This suggests that the company may be experiencing challenges in effectively leveraging its fixed assets to drive revenue growth.

Moving on to the total asset turnover, which measures how well the company is using all its assets to generate sales, Entergy Corp. has shown variability in this ratio as well, with values ranging from 0.17 to 0.23. A lower total asset turnover ratio indicates that the company may not be efficiently utilizing all its assets to generate revenue.

Overall, the declining trend in fixed asset turnover and fluctuations in total asset turnover suggest that Entergy Corp. may need to reassess its asset utilization strategies and consider ways to improve efficiency in generating sales from its fixed and total assets. Addressing these issues could help the company improve its long-term operational performance and profitability.