MGE Energy Inc (MGEE)
Days of inventory on hand (DOH)
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 0.32 | 0.29 | 0.29 | 0.29 | 0.26 | 0.24 | 0.31 | 0.45 | 0.38 | 0.40 | 0.44 | 0.51 | 0.39 | 0.37 | 0.41 | 0.47 | 0.46 | 0.05 | 0.05 | 0.04 | |
| DOH | days | 1,156.76 | 1,238.49 | 1,271.05 | 1,252.02 | 1,387.29 | 1,525.90 | 1,170.78 | 813.34 | 970.84 | 905.81 | 833.94 | 714.58 | 934.55 | 980.24 | 898.12 | 773.05 | 786.00 | 7,497.81 | 7,796.02 | 9,817.89 |
December 31, 2023 calculation
DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.32
= 1,156.76
The days of inventory on hand (DOH) measure how many days a company takes to sell its average inventory balance. A lower DOH indicates efficient inventory management, while a higher DOH suggests slower inventory turnover.
Analyzing MGE Energy Inc's DOH over the past few quarters, we observe fluctuating trends. From March 2019 to September 2020, the DOH figures ranged from 773.05 to 980.24 days, showing some variability but generally within a reasonable range for a utility company.
However, there was a significant spike in DOH in the fourth quarter of 2020 and first quarter of 2021, with figures soaring to 7,497.81 and 7,796.02 days, respectively. This abnormal increase indicates potential issues with inventory management, leading to excessive inventory levels.
The company managed to swiftly address this concern, as evident from the declining trend from the second quarter of 2021 (714.58 days) to the fourth quarter of 2022 (813.34 days). This improvement suggests that MGE Energy Inc made strategic adjustments to enhance its inventory turnover efficiency.
Despite this progress, the DOH saw an uptick in the first half of 2023, reaching levels above 1,200 days. This increase may warrant further investigation to determine the underlying reasons for the slowdown in inventory turnover during this period.
In conclusion, while MGE Energy Inc has shown resilience in managing its inventory levels after a notable spike, the recent increase in DOH highlights the importance of ongoing monitoring and optimization of inventory practices to maintain operational efficiency.