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