Nextera Energy Inc (NEE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.01 | 3.59 | 3.89 | 3.95 | 4.81 |
| Receivables turnover | 5.43 | 4.49 | 4.51 | 5.58 | 6.27 |
| Payables turnover | 4.53 | 3.94 | 4.41 | 6.19 | 5.54 |
| Working capital turnover | — | — | — | — | — |
NextEra Energy Inc's activity ratios indicate the efficiency of its management in utilizing its assets and managing its working capital.
1. Inventory Turnover:
The inventory turnover ratio has fluctuated over the years, ranging from 2.28 to 3.30. This indicates that NextEra Energy Inc is efficiently managing its inventory levels, with the ability to sell and replace its inventory multiple times during the year. A lower inventory turnover in 2020 suggests a slower movement of inventory compared to the other years.
2. Receivables Turnover:
The receivables turnover ratio has also varied, with values ranging from 4.11 to 6.84. A higher ratio signifies that NextEra Energy Inc has been successful in collecting payments from customers promptly. The increase in 2022 and 2023 suggests an improvement in the collection efficiency compared to the previous years.
3. Payables Turnover:
The payables turnover ratio has seen fluctuations between 0.64 and 1.20, indicating how effectively NextEra Energy Inc pays its suppliers. A lower ratio in 2021 and 2023 suggests a longer payment period to suppliers, which could be beneficial for cash flow management.
4. Working Capital Turnover:
The data for the working capital turnover ratio is not provided, making it difficult to assess how NextEra Energy Inc's working capital is being employed to generate revenue. This ratio would typically measure how efficiently the company is using its working capital to support its operations.
In summary, NextEra Energy Inc has shown varying levels of efficiency in managing its inventory, collecting receivables, and paying suppliers over the past five years. Further analysis of the working capital turnover ratio would provide a more complete picture of the company's overall activity 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 | 91.11 | 101.76 | 93.76 | 92.38 | 75.94 |
| Days of sales outstanding (DSO) | days | 67.26 | 81.33 | 80.91 | 65.41 | 58.20 |
| Number of days of payables | days | 80.51 | 92.60 | 82.77 | 58.99 | 65.87 |
NextEra Energy Inc's activity ratios provide insight into the company's efficiency in managing its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the past five years, with a peak in 2020 and a decrease in 2022 and 2021 before a significant increase in 2023.
- In 2023, the company held inventory for an average of 140.86 days, which indicates that it takes approximately this number of days to sell its inventory stock.
- A higher DOH could imply excess inventory levels or slow turnover, which may tie up capital and lead to potential obsolescence.
2. Days of Sales Outstanding (DSO):
- The DSO ratio also exhibits variability, with peaks in 2022 and 2021.
- A lower DSO indicates that NextEra Energy Inc has been able to collect its receivables more efficiently, converting credit sales into cash quickly.
- In 2023, the company took around 59.11 days to collect its outstanding sales, showing improved efficiency in managing receivables compared to the previous years.
3. Number of Days of Payables:
- The days of payables trend reveals an increasing pattern over the five years, with a significant jump in 2023.
- In 2023, NextEra Energy Inc took on average 568.80 days to pay its suppliers, indicating a longer payment period.
- Extending the payment period may provide the company with more cash on hand, but it could strain relationships with suppliers if not managed effectively.
Overall, while NextEra Energy Inc has shown improvements in managing receivables, there are challenges in inventory turnover and an increasing payment period to suppliers. Continuous monitoring and effective management of these activity ratios are crucial for optimizing working capital and enhancing overall operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.20 | 0.21 | 0.19 | 0.18 | 0.21 |
| Total asset turnover | 0.14 | 0.15 | 0.14 | 0.13 | 0.15 |
NextEra Energy Inc's long-term activity ratios indicate its efficiency in utilizing its fixed assets and total assets to generate revenue over the past five years.
1. Fixed asset turnover:
The fixed asset turnover ratio measures how effectively a company utilizes its fixed assets to generate sales. NextEra Energy's fixed asset turnover has been fluctuating over the years, with a notable increase in 2023 compared to 2022 and 2021. Despite the increase in 2023, the ratio remains relatively low, indicating that the company may not be efficiently using its fixed assets to generate sales revenue.
2. Total asset turnover:
The total asset turnover ratio reflects how well a company is using all its assets to generate revenue. NextEra Energy's total asset turnover has also shown fluctuations over the years, with a slight increase in 2023 compared to 2022 and 2021. However, similar to the fixed asset turnover ratio, the total asset turnover ratio remains low, suggesting that the company may not be maximizing the use of its total assets to generate sales.
Overall, the long-term activity ratios of NextEra Energy Inc suggest that there may be room for improvement in the company's efficiency in utilizing its assets to generate revenue. Further analysis and strategic adjustments may be necessary to improve the company's asset utilization efficiency in the future.