PNM Resources Inc (PNM)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		9.84	9.02	9.57	8.72	9.83
DSO	days	37.09	40.48	38.12	41.84	37.12

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 9.84
= 37.09

To analyze PNM Resources Inc's Days Sales Outstanding (DSO) over the past five years, we observe fluctuations in the company's ability to collect its accounts receivable.

In 2019, the DSO was 40.17 days, indicating that on average, it took the company about 40 days to collect its sales revenues. This improved to 41.98 days in 2021 before slightly increasing to 43.78 days in 2022. However, the DSO decreased to 51.49 days in 2023, reflecting a lengthened collection period compared to the previous year.

The increase in DSO from 2022 to 2023 may indicate a potential concern regarding the company's accounts receivable management and collections efficiency. It implies that PNM Resources Inc is taking longer to convert its credit sales into cash, which could lead to liquidity or cash flow issues if not managed effectively.

Overall, a rising trend in DSO may suggest weakening credit policies, potential customer payment issues, or changes in the company's sales mix. It is essential for PNM Resources Inc to monitor and address the factors influencing DSO to maintain healthy cash flow and financial stability.