Norfolk Southern Corporation (NSC)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	16.10	15.36	16.34	15.11	13.73
Receivables turnover	11.34	9.97	10.50	10.75	10.81
Payables turnover	2.62	2.48	3.20	2.44	2.99
Working capital turnover	—	17.89	—	—	58.00

Activity ratios provide insights into how effectively a company is managing its assets and liabilities to generate revenue. Let's analyze Norfolk Southern Corporation's activity ratios based on the provided data:

1. Inventory Turnover: Norfolk Southern's inventory turnover has been increasing steadily over the years, indicating that the company is selling its inventory more efficiently. In particular, the ratio increased from 13.73 in 2020 to 16.10 in 2024, suggesting the company is managing its inventory well and converting it into sales at a faster rate.

2. Receivables Turnover: The receivables turnover for Norfolk Southern fluctuated slightly over the years, ranging from 9.97 in 2023 to 11.34 in 2024. A higher turnover ratio indicates that the company is collecting its receivables more quickly. The higher ratio in 2024 suggests that Norfolk Southern may have improved its credit policies or collection processes.

3. Payables Turnover: The payables turnover ratio for Norfolk Southern shows some variability, with a notable increase in 2022 followed by fluctuations in subsequent years. This ratio indicates how quickly the company is paying its suppliers. The fluctuations may suggest changes in payment terms or procurement strategies.

4. Working Capital Turnover: The data indicates that there are missing values for the working capital turnover in some years. However, the available data shows a significant decrease in the turnover ratio from 58.00 in 2020 to 17.89 in 2023. A lower turnover ratio could signify that Norfolk Southern is using its working capital less efficiently to generate revenue.

In conclusion, Norfolk Southern Corporation's activity ratios reflect improvements in inventory management and receivables collection efficiency. However, fluctuations in payables turnover and a decreasing trend in working capital turnover may indicate areas for further analysis and operational optimization.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	22.66	23.76	22.34	24.15	26.58
Days of sales outstanding (DSO)	days	32.19	36.61	34.76	33.94	33.78
Number of days of payables	days	139.42	147.44	114.19	149.66	122.19

Activity ratios are important measures of how efficiently a company is managing its assets and operations. Let's analyze Norfolk Southern Corporation's activity ratios based on the provided data:

1. Days of Inventory on Hand (DOH):
- Norfolk Southern Corporation's inventory turnover has been showing a declining trend over the past few years. The company had 26.58 days of inventory on hand at the end of 2020, which decreased to 22.66 days by the end of 2024. This indicates that the company is managing its inventory more efficiently over time, resulting in a shorter holding period for inventory.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding for Norfolk Southern Corporation have fluctuated slightly over the years. The company had 33.78 days of sales outstanding at the end of 2020, which increased to 36.61 days by the end of 2023 before decreasing to 32.19 days by the end of 2024. A lower DSO indicates that the company is collecting its receivables more quickly.

3. Number of Days of Payables:
- Norfolk Southern Corporation's payables turnover has also varied over the years. The number of days of payables decreased from 122.19 days at the end of 2020 to 114.19 days at the end of 2022, before increasing to 139.42 days by the end of 2024. A longer period of payables indicates that the company is taking longer to pay its suppliers, which may have implications for cash flow management.

In conclusion, Norfolk Southern Corporation has shown improvements in managing its inventory and receivables efficiently, as indicated by decreasing DOH and DSO over the years. However, the increase in the number of days of payables in recent years suggests a potential impact on the company's cash flow management that may need further analysis.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	0.34	0.34	0.37	0.33	0.29
Total asset turnover	0.28	0.27	0.31	0.27	0.24

The fixed asset turnover ratio for Norfolk Southern Corporation has shown a gradual improvement from 0.29 in December 31, 2020, to 0.37 in December 31, 2022. However, there was a slight decline to 0.34 in both December 31, 2023, and December 31, 2024. This ratio indicates that the company generated $0.37 in revenue for every dollar of fixed assets invested in 2022.

In terms of total asset turnover, Norfolk Southern Corporation also experienced an increase from 0.24 in December 31, 2020, to 0.31 in December 31, 2022. Subsequently, there was a slight decline to 0.27 in both December 31, 2023, and December 31, 2024. This ratio signifies that the company generated $0.31 in revenue for every dollar of total assets in 2022.

Overall, the long-term activity ratios suggest that Norfolk Southern Corporation has been effectively utilizing its fixed assets and total assets to generate revenue, although there was a slight dip in performance in the later years reviewed. Further analysis and comparison with industry benchmarks could provide additional insights into the company's operational efficiency and asset utilization.