Pinnacle West Capital Corp (PNW)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its resources and generating revenue from its operations. Let's analyze the activity ratios of Pinnacle West Capital Corp. based on the provided data:

1. Inventory turnover:
- The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a specific period. Pinnacle West's inventory turnover has been relatively stable, ranging from 3.24 to 3.79 over the past eight quarters. A higher turnover indicates efficient management of inventory levels.

2. Receivables turnover:
- The receivables turnover ratio reflects how quickly a company collects payments from its customers. Pinnacle West's receivables turnover has varied, with the ratio ranging from 5.14 to 8.85 during the same period. An increasing trend in this ratio suggests effective credit and collection practices.

3. Payables turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers. Pinnacle West's payables turnover has shown some fluctuation, with values ranging from 2.98 to 4.87 over the quarters. A higher turnover implies more efficient management of accounts payable.

4. Working capital turnover:
- The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate revenue. The data provided shows limited information on this ratio, with a significant value of 186.44 in Q1 2023. A high working capital turnover implies efficient use of working capital to support revenue generation.

In summary, Pinnacle West Capital Corp. demonstrates stable inventory turnover, varying but generally improving receivables turnover, fluctuations in payables turnover, and a substantial working capital turnover in Q1 2023. Overall, these activity ratios suggest that the company is efficiently managing its resources to support its operations and revenue generation.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its resources to generate sales and collect payments from customers. Let's analyze the activity ratios of Pinnacle West Capital Corp. based on the provided data:

1. Days of Inventory on Hand (DOH): This ratio indicates how long, on average, it takes for the company to sell its inventory. A lower DOH is generally preferred as it implies faster inventory turnover. Pinnacle West Capital Corp. has shown a fluctuating trend in DOH over the past few quarters, ranging from 96.28 days to 113.44 days. The company should aim to minimize DOH to avoid tying up excess capital in inventory.

2. Days of Sales Outstanding (DSO): DSO reveals the average number of days it takes for the company to collect payments from its customers. A lower DSO suggests more efficient credit management and faster cash conversion. Pinnacle West Capital Corp. has also displayed fluctuations in DSO, with values ranging from 47.35 days to 71.00 days. The company should focus on reducing DSO to improve cash flow and liquidity.

3. Number of Days of Payables: This ratio reflects the average number of days the company takes to pay its suppliers. A higher number of days of payables indicates extended credit terms with suppliers. Pinnacle West Capital Corp. has shown variability in this ratio as well, with values ranging from 75.01 days to 122.32 days. While managing payables effectively can provide working capital benefits, the company should also consider maintaining good relationships with suppliers.

Overall, Pinnacle West Capital Corp. should aim to optimize its activity ratios by streamlining inventory management, enhancing collections from customers, and strategically managing payables to improve its operational efficiency and financial performance.

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Long-term

The long-term activity ratios for Pinnacle West Capital Corp. indicate the efficiency of the company in generating sales from its fixed assets and total assets.

The fixed asset turnover ratio has remained relatively stable at around 0.27 throughout the four quarters of 2023, which suggests that the company is generating consistent sales revenue in relation to its investment in fixed assets. This indicates that Pinnacle West Capital Corp. is effectively utilizing its fixed assets to generate sales.

Similarly, the total asset turnover ratio has also remained constant at 0.19 for all quarters in 2023. This implies that the company is efficiently generating sales from its total assets, including both fixed and current assets. Overall, the stable total asset turnover ratio suggests that Pinnacle West Capital Corp. is effectively managing its assets to generate sales revenue.

In conclusion, based on the long-term activity ratios, it appears that Pinnacle West Capital Corp. is effectively utilizing its assets to generate sales and is maintaining a consistent level of efficiency in this aspect of its operations.