NiSource Inc (NI)

Short-term

Turnover ratios

Based on the provided data, let's analyze the activity ratios of NiSource Inc:

1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently a company manages its inventory. NiSource's inventory turnover has been relatively consistent over the years, ranging from 3.28 to 3.95. A higher turnover ratio generally indicates better inventory management efficiency.

2. Receivables Turnover:
- The receivables turnover ratio shows how efficiently a company collects payments from its customers. NiSource's receivables turnover has shown improvement over the years, increasing from 3.37 to 5.59. A higher turnover ratio suggests that NiSource is collecting payments more quickly from its customers.

3. Payables Turnover:
- The payables turnover ratio reflects how efficiently a company pays its suppliers. NiSource's payables turnover has fluctuated over the years, ranging from 1.78 to 2.74. A higher turnover ratio indicates that NiSource is paying its suppliers more quickly.

4. Working Capital Turnover:
- Working capital turnover is not provided in the data, which could indicate that NiSource may not rely heavily on its working capital to generate sales or that the calculation is not relevant for the company's operations.

Overall, based on the activity ratios analysis:
- NiSource's inventory turnover is stable, indicating effective management of inventory levels.
- The improvement in receivables turnover suggests efficient collection of payments from customers.
- The fluctuation in payables turnover may signal changes in the company's payment practices.
- The absence of working capital turnover data limits our ability to assess the company's efficiency in utilizing working capital for generating sales.

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Average number of days

NiSource Inc's activity ratios based on the provided data show the following trends:

1. Days of Inventory on Hand (DOH):
- The DOH has increased from 97.60 days in December 2020 to 92.44 days in December 2024.
- The company's inventory turnover has been fluctuating over the years, indicating potential changes in inventory management efficiency.
- In general, a higher DOH may suggest slower inventory turnover, which could tie up working capital and increase holding costs.

2. Days of Sales Outstanding (DSO):
- DSO decreased significantly from 108.38 days in December 2020 to 65.31 days in December 2023, before increasing slightly to 75.00 days in December 2024.
- The declining trend in DSO indicates a more efficient collection of receivables, which could improve cash flow management.
- However, the slight increase in 2024 may indicate potential issues with collecting payments from customers within a reasonable timeframe.

3. Number of Days of Payables:
- The number of days of payables increased from 143.32 days in December 2020 to 205.06 days in December 2024.
- The significant increase in the days of payables could be beneficial for cash flow management as the company takes longer to settle its payables, thus retaining cash for longer periods.
- However, an excessively high number of days of payables may strain relationships with suppliers and impact the company's creditworthiness.

Overall, NiSource Inc's activity ratios suggest mixed performance in inventory management, receivables collection, and payables management over the years. It is essential for the company to continuously monitor and optimize these ratios to ensure effective working capital management and overall financial health.

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Long-term

NiSource Inc's fixed asset turnover has shown a slight increasing trend over the period from 2020 to 2024, indicating the company's ability to generate revenue from its fixed assets. The ratio increased from 0.23 in 2020 to 0.27 in 2022 before declining to 0.18 in 2024. This suggests that the company has been utilizing its fixed assets more efficiently to generate sales, although the decrease in 2024 may require further investigation.

In contrast, NiSource Inc's total asset turnover ratio has shown a fluctuating trend over the same period. The ratio increased from 0.17 in 2020 to 0.20 in 2022 before declining to 0.15 in 2024. This erratic movement may indicate changes in the company's overall asset utilization efficiency over time. The declining trend in the total asset turnover ratio from 2022 to 2024 could suggest potential challenges in optimizing the use of both fixed and current assets to generate sales revenue.

Overall, the analysis of NiSource Inc's long-term activity ratios highlights the importance of monitoring both fixed asset turnover and total asset turnover over time to assess the company's operational efficiency and effectiveness in utilizing its assets to generate revenue.