National Fuel Gas Company (NFG)

Short-term

Turnover ratios

Based on the activity ratios of National Fuel Gas Co. for the years ending September 30, 2019 to September 30, 2023, the following analysis can be made:

1. Inventory Turnover:
The inventory turnover ratio measures how efficiently the company manages its inventory. A higher turnover ratio indicates that the company sells its inventory quickly. National Fuel Gas Co. has maintained a relatively consistent inventory turnover ratio, which is a positive sign. In 2021, there was a lower turnover ratio, indicating that the company held inventory for a longer period, possibly due to changes in demand or supply chain disruptions.

2. Receivables Turnover:
The receivables turnover ratio measures how efficiently the company collects its receivables from customers. A higher turnover ratio indicates that the company collects its receivables more quickly. Over the years, National Fuel Gas Co. has shown fluctuations in its receivables turnover ratio. The significant increase in 2023 reflects an improvement in the collection of receivables, possibly due to more effective credit and collection policies.

3. Payables Turnover:
The payables turnover ratio measures how efficiently the company pays its suppliers and creditors. A higher turnover ratio indicates that the company pays its payables more quickly. National Fuel Gas Co. has maintained a relatively stable payables turnover ratio, demonstrating consistent payment practices. The increase in the turnover ratio from 2021 to 2022 indicates that the company improved its payment efficiency during this period.

4. Working Capital Turnover:
The data provided does not include the working capital turnover ratio for the company, making it challenging to analyze the efficiency of National Fuel Gas Co. in utilizing its working capital to generate sales during the specified period.

In summary, National Fuel Gas Co. has shown consistent management of its inventory and maintained relatively stable payment practices to suppliers. The significant improvement in receivables turnover in 2023 demonstrates enhanced efficiency in collecting receivables, contributing to better cash flow management.

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Average number of days

Based on the activity ratios for National Fuel Gas Co., we can observe the following trends:

Days of Inventory on Hand (DOH):
The DOH ratio measures the number of days it takes for the company to turn its inventory into sales. A higher DOH indicates slower inventory turnover. Over the past five years, National Fuel Gas Co. has demonstrated fluctuating inventory turnover, with a significant increase in 2021 followed by a decrease in 2022 and an almost consistent level in 2023. This suggests potential challenges in managing and selling inventory, particularly in 2021.

Days of Sales Outstanding (DSO):
The DSO ratio reflects the average number of days it takes the company to collect its accounts receivable. A higher DSO indicates that the company is taking longer to collect its sales revenue. National Fuel Gas Co. experienced a peak in DSO in 2022, followed by a substantial decrease in 2023. These fluctuations may signal changes in the company's credit and collection policies that could impact its cash flow.

Number of Days of Payables:
This ratio represents the average number of days it takes the company to pay its suppliers. A longer period indicates that the company is taking longer to pay its bills. National Fuel Gas Co. saw a significant increase in the number of days of payables in 2021, followed by a decrease in 2022 and a relatively stable level in 2023. These shifts may signify changes in the company's payment practices and relationships with suppliers.

Overall, the activity ratios for National Fuel Gas Co. demonstrate fluctuating trends in inventory turnover, accounts receivable collection, and accounts payable management over the past five years. These trends could be indicative of underlying operational and financial challenges that may require further analysis and attention.

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Long-term

The long-term activity ratios of National Fuel Gas Co. indicate the company's effectiveness in utilizing its assets to generate sales over a period of five years. The fixed asset turnover ratio, which measures the efficiency of using fixed assets to generate revenue, demonstrates a declining trend from 0.31 in 2019 to 0.30 in 2023, with fluctuations in between. This suggests a decrease in the company's ability to generate sales from its fixed assets over time.

Similarly, the total asset turnover ratio, which reflects the company's ability to generate sales from all its assets, also shows a declining trend from 0.26 in 2019 to 0.22 in 2020, followed by a slight increase to 0.26 in 2023. This indicates a fluctuating trend in the company's efficiency in generating sales from its total assets.

Overall, the declining trends in both fixed asset turnover and total asset turnover ratios suggest that National Fuel Gas Co. may be facing challenges in effectively utilizing its assets to generate sales, which could impact its long-term financial performance. Further analysis of the company's operational and investment strategies may be necessary to address this trend and improve asset utilization efficiency.