PG&E Corp (PCG)

Short-term

Turnover ratios

Inventory turnover measures how efficiently a company manages its inventory by indicating the number of times inventory is sold and replaced within a period. The trend in PG&E Corp.'s inventory turnover ratio has been declining from 5.92 in 2019 to 4.82 in 2023, which suggests a decrease in the efficiency of managing inventory.

Receivables turnover ratio reflects how effectively a company collects its accounts receivable from customers. PG&E Corp.'s receivables turnover ratio has also seen a decline from 3.01 in 2020 to 2.34 in 2023, indicating a slower rate of collecting payments from customers over the years.

Payables turnover ratio shows how quickly a company pays its suppliers and creditors. PG&E Corp.'s payables turnover ratio has fluctuated over the years but generally remained stable, ranging from 1.21 in 2020 to 1.33 in 2023, implying a consistent payment pattern to suppliers.

Working capital turnover ratio, though not provided for all years, is a measure of how efficiently a company utilizes its working capital to generate sales. The lack of data for this ratio for PG&E Corp. makes it difficult to assess its efficiency in utilizing working capital for generating revenue.

Overall, the activity ratios for PG&E Corp. show a mixed performance with decreasing inventory turnover and receivables turnover ratios, stable payables turnover ratio, and limited information on working capital turnover. Further analysis and comparison with industry benchmarks could provide deeper insights into the company's operational efficiency.

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Average number of days

Activity ratios help assess how efficiently a company manages its assets and liabilities. Let's analyze PG&E Corp.'s activity ratios based on the provided data:

1. Days of Inventory on Hand (DOH):
- The trend shows an increase in the DOH from 2019 to 2023, indicating that PG&E Corp. is holding inventory for a longer period before selling it.
- This suggests a possible inefficiency in managing inventory levels, which may tie up cash and lead to increased storage costs.

2. Days of Sales Outstanding (DSO):
- The DSO fluctuates over the years, with the highest value in 2019 and the lowest in 2020.
- A high DSO may indicate that PG&E Corp. takes a longer time to collect revenue from customers, possibly due to lenient credit policies or difficulties in collecting payments.

3. Number of Days of Payables:
- The number of days of payables has varied, reaching its peak in 2018 and declining in subsequent years.
- A longer period of payables suggests that PG&E Corp. takes more time to pay its suppliers, which could be beneficial in managing cash flow but may strain supplier relationships.

Overall, the activity ratios for PG&E Corp. reflect fluctuations in inventory management, sales collection efficiency, and payment practices over the years. It is crucial for the company to strike a balance between these factors to optimize its working capital management and improve overall operational efficiency.

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Long-term

Based on the data provided for PG&E Corp., the fixed asset turnover ratio measures the company's ability to generate sales revenue from its investment in fixed assets. The trend in the fixed asset turnover ratio has been relatively stable over the past five years, ranging from 0.28 to 0.30. This suggests that PG&E Corp. is efficiently using its fixed assets to generate revenue, with a slight improvement in 2023 compared to previous years.

On the other hand, the total asset turnover ratio reflects the company's overall efficiency in generating sales revenue from all its assets. The total asset turnover ratio for PG&E Corp. has also shown stability over the past five years, fluctuating between 0.18 and 0.20. This indicates that PG&E Corp. has been consistent in using its total assets to generate sales revenue, with a slight decrease in 2022 followed by a slight increase in 2023.

In conclusion, PG&E Corp. has demonstrated a decent level of efficiency in utilizing both its fixed assets and total assets to generate sales revenue over the past five years, as indicated by the stable trend in both the fixed asset turnover and total asset turnover ratios. It is crucial for the company to continue monitoring these ratios to ensure effective asset utilization and sustainable revenue generation in the long term.