NewJersey Resources Corporation (NJR)

Payables turnover

Sep 30, 2024 Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020
Cost of revenue US$ in thousands 18,188 17,021 16,815 102,814 11,593
Payables US$ in thousands 169,232 151,790 156,580 223,497 141,500
Payables turnover 0.11 0.11 0.11 0.46 0.08

September 30, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $18,188K ÷ $169,232K
= 0.11

The payables turnover ratio measures how efficiently a company manages its trade payables by comparing the amount of purchases made on credit to the average accounts payable balance. A higher ratio indicates a faster turnover of payables, which can suggest better cash flow management and stronger supplier relationships.

In the case of NewJersey Resources Corporation, the payables turnover ratio has been relatively low and consistent for the past five years, ranging from 0.08 to 0.46. This indicates that the company takes a significantly long time to pay its suppliers compared to its purchases on credit. In particular, the significant drop in the ratio in 2020 followed by a sharp increase in 2021 suggests a potential change in the company's payment practices during those years.

The consistent low payables turnover ratio could imply that NewJersey Resources Corporation may be taking advantage of extended payment terms from its suppliers, which could potentially strain supplier relationships in the long term. It may also signal inefficiencies in managing accounts payable and cash flow.

Further investigation into the company's payment policies, relationship with suppliers, and overall working capital management would provide a more in-depth understanding of the factors driving the payables turnover ratio. Additionally, benchmarking the ratio against industry peers could help assess the company's performance in this aspect relative to its competitors.


Peer comparison

Sep 30, 2024