MGE Energy Inc (MGEE)

Short-term

Turnover ratios

MGE Energy Inc's activity ratios reflect how efficiently the company manages its resources to generate revenue.

The inventory turnover ratio indicates that MGE Energy Inc is efficient in selling its inventory. Over the years, the ratio has fluctuated slightly, ranging from 0.26 to 0.39. A lower inventory turnover may suggest excess stock or slow-moving inventory, which could tie up capital.

The receivables turnover ratio measures how quickly the company collects payment from its customers. MGE Energy Inc's receivables turnover has been relatively stable between 6.25 to 7.23, showing that the company efficiently collects payments from its customers.

The payables turnover ratio signifies how quickly the company pays its suppliers. MGE Energy Inc's payables turnover has remained consistent around 0.30 to 0.35, indicating a steady payment cycle with suppliers.

The working capital turnover ratio evaluates how well the company generates revenue from its working capital. MGE Energy Inc's working capital turnover has shown significant fluctuations over the years, with values ranging from 6.66 to 38.79. A higher ratio indicates that the company is effectively utilizing its working capital to generate revenue.

Overall, MGE Energy Inc appears to manage its activity ratios reasonably well, with efficient inventory turnover and collection of receivables, along with a stable payment cycle. However, the fluctuation in the working capital turnover ratio may require further investigation to understand the underlying reasons for the variations.

---

Average number of days

MGE Energy Inc's activity ratios provide insights into how effectively the company manages its assets and liabilities.

1. Days of Inventory on Hand (DOH): The trend in the DOH ratio indicates the number of days it takes for MGE Energy Inc to convert its inventory into sales. The company experienced an increase in its DOH from 934.55 days in 2020 to 1,387.29 days in 2022, which suggests that it held onto its inventory for a longer period before selling it. However, there was a decrease in the DOH to 958.14 days in 2024, indicating a potential improvement in inventory turnover efficiency.

2. Days of Sales Outstanding (DSO): The DSO ratio reflects how efficiently MGE Energy Inc collects its accounts receivable. The company's DSO increased from 51.63 days in 2020 to 58.43 days in 2021 before decreasing to 50.50 days in 2023. A lower DSO indicates faster collection of receivables, which is positive for cash flow management.

3. Number of Days of Payables: The days of payables ratio measures how long MGE Energy Inc takes to pay its suppliers. The company showed fluctuations in this ratio, with an increase from 1,080.41 days in 2020 to 1,198.59 days in 2021, followed by a decline to 1,046.73 days in 2023. A lower number of days of payables may indicate more efficient management of trade credit terms.

Overall, MGE Energy Inc should aim to strike a balance in its activity ratios to optimize its working capital management and improve its overall financial performance.

---

Long-term

MGE Energy Inc's long-term activity ratios reflect the efficiency of the company in managing its assets. The fixed asset turnover ratio has shown a gradual increase from 0.30 in 2020 to 0.36 in 2022 before slightly decreasing to 0.30 in 2024. This indicates that the company is generating more revenue relative to its fixed assets over the period under review.

On the other hand, the total asset turnover ratio has fluctuated within a narrower range, with values ranging from 0.24 to 0.28. This ratio measures how efficiently the company is utilizing all its assets to generate revenue. While the total asset turnover ratio has generally been lower than the fixed asset turnover ratio, the stable performance suggests that MGE Energy Inc has effectively utilized its total assets to generate revenue over the years.

Overall, the increase in the fixed asset turnover ratio coupled with the relatively stable total asset turnover ratio indicates that MGE Energy Inc has been improving its efficiency in utilizing both fixed and total assets to generate revenue, which is a positive sign for the company's long-term operational performance.