FirstEnergy Corporation (FE)

Short-term

Turnover ratios

Firstenergy Corp.'s activity ratios provide insight into how efficiently the company is managing its assets and liabilities.

- Inventory turnover: This ratio indicates how many times the company's inventory is sold and replaced over a period. Based on the data, we observe a declining trend in inventory turnover from 2019 to 2023, which may suggest that inventory is being held for longer periods or sales are declining. However, the ratio remains above 9, indicating that the company is still efficiently managing its inventory.

- Receivables turnover: This ratio reflects how efficiently the company is collecting payments from its customers. The data shows fluctuations in receivables turnover over the years but generally remains relatively stable. A higher turnover ratio indicates that receivables are being collected quickly, which is positive for cash flow.

- Payables turnover: This ratio measures how quickly the company pays its suppliers. Firstenergy Corp.'s payables turnover has been relatively consistent over the years, hovering around 3. This indicates that the company is managing its payables efficiently by not delaying payments excessively or paying too early.

- Working capital turnover: The data provided does not include the working capital turnover ratio for Firstenergy Corp. This ratio typically evaluates how effectively the company is using its working capital to generate revenue.

Overall, based on the activity ratios analyzed, Firstenergy Corp. appears to be managing its inventory, receivables, and payables efficiently, which is crucial for maintaining a healthy cash flow and overall financial performance.

---

Average number of days

FirstEnergy Corp.'s activity ratios provide insight into how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, it takes for the company to sell its inventory. FirstEnergy Corp.'s DOH has been increasing over the past five years, indicating that the company is holding onto its inventory for longer periods. This trend could suggest potential issues with inventory management, such as overstocking or slowing sales.

2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect revenue after making a sale. FirstEnergy Corp.'s DSO has fluctuated slightly over the past five years but has remained relatively stable. A decreasing DSO would indicate improved efficiency in collecting accounts receivable, while an increasing DSO could signal challenges in collecting payments from customers.

3. Number of Days of Payables: This ratio reveals how long it takes the company to pay its suppliers. FirstEnergy Corp.'s number of days of payables has fluctuated over the years but has generally been within a reasonable range. A higher number of days of payables may indicate that the company is taking longer to pay its bills, potentially benefiting from trade credit terms. However, it could also suggest a strained relationship with suppliers if payment terms are being stretched too far.

In summary, FirstEnergy Corp. should closely monitor its activity ratios to identify any inefficiencies in managing its inventory, receivables, and payables, and make adjustments as needed to optimize its working capital management.

---

Long-term

Firstenergy Corp.'s long-term activity ratios provide insight into how efficiently the company is managing its assets to generate revenue. The fixed asset turnover ratio remained relatively stable around 0.34 over the years, indicating that for each dollar invested in fixed assets, the company generated $0.34 of sales. This suggests that Firstenergy Corp. has maintained consistent utilization of its fixed assets to drive revenue.

On the other hand, the total asset turnover ratio shows a slight fluctuation, ranging from 0.24 to 0.27 over the past five years. The ratio dropped to 0.24 in 2020 before recovering to 0.27 in 2022, signaling variations in the company's overall efficiency in generating sales from its total assets. The 2023 figure of 0.26 suggests that for each dollar of total assets, Firstenergy Corp. generated $0.26 in sales during the year.

While the fixed asset turnover indicates stability in asset utilization, the total asset turnover highlights some inconsistency in the company's overall asset management efficiency. Further analysis and comparison with industry benchmarks would be beneficial to determine the effectiveness of Firstenergy Corp.'s asset utilization strategies in the long term.