NewJersey Resources Corporation (NJR)

Short-term

Turnover ratios

The inventory turnover for New Jersey Resources Corporation has shown a decreasing trend over the past five years, standing at 4.29 in 2023 compared to 11.05 in 2019. This suggests that the company is taking longer to sell its inventory, which could indicate potential issues with sales or overstocking.

In contrast, the receivables turnover has increased from 18.56 in 2019 to 18.59 in 2023, indicating that the company is collecting its receivables more efficiently over time. This may suggest an improvement in the company's credit management and collection processes.

The payables turnover data are not available, so it's challenging to assess the company's ability to pay its creditors efficiently.

Lastly, the working capital turnover has not been provided for the most recent years, but it was notably high in 2019 at 39.74, suggesting that the company was efficiently utilizing its working capital to generate sales. However, the lack of data for the subsequent years makes it difficult to assess any trends or changes in this ratio.

Overall, while the company's receivables turnover has shown improvement, the decreasing trend in inventory turnover and the lack of data for payables turnover and recent working capital turnover makes it challenging to provide a complete picture of the company's activity ratios.

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Average number of days

Based on the provided data, the activity ratios for New Jersey Resources Corporation can be analyzed as follows:

Days of Inventory on Hand (DOH):
The DOH ratio measures the average number of days it takes for a company to sell its inventory. Over the years, there has been an increasing trend in the DOH for New Jersey Resources Corporation, with the number of days rising from 33.03 days in 2019 to 85.09 days in 2023. This suggests that the company is holding onto its inventory for a longer period, which may tie up resources and lead to increased carrying costs.

Days of Sales Outstanding (DSO):
The DSO ratio represents the average number of days it takes for a company to collect payment after a sale has been made. New Jersey Resources Corporation has shown some variability in its DSO over the years, with the highest number of days recorded in 2021 at 33.60 days and the lowest in 2019 at 19.66 days. The decrease from 2021 to 2023 may indicate an improvement in the company's accounts receivable management, leading to faster collection of cash from customers.

Number of Days of Payables:
The data provided does not include the number of days of payables, making it difficult to evaluate the efficiency of New Jersey Resources Corporation in paying its suppliers.

In summary, while the trend in DOH suggests a longer holding period for inventory, the variability in DSO may indicate improvements in accounts receivable management. However, the absence of the number of days of payables limits a comprehensive assessment of the company's activity ratios.

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Long-term

The long-term activity ratios of New Jersey Resources Corporation reveal significant fluctuations in the efficiency of utilizing its assets over the past five years. The fixed asset turnover ratio indicates a notable decline from 0.85 in 2019 to 0.39 in 2023, suggesting a decrease in the company's ability to generate revenue from its fixed assets. This decline may be attributed to either underutilization or overinvestment in fixed assets.

Furthermore, the total asset turnover ratio also demonstrates a diminishing trend, declining from 0.59 in 2019 to 0.30 in 2023. This indicates that the company's overall efficiency in utilizing its total assets to generate sales has gradually decreased. It is important to note that a low total asset turnover ratio may reflect suboptimal utilization of assets, potentially resulting from excess inventory or unproductive assets.

The declining trend in both fixed asset turnover and total asset turnover ratios suggests a need for New Jersey Resources Corporation to reassess its asset management strategies and consider potential adjustments to improve efficiency and maximize the generation of revenue from its assets.