PPL Corporation (PPL)

Short-term

Turnover ratios

The activity ratios of PPL Corp indicate its efficiency in managing its operations, particularly in relation to inventory, receivables, and payables.

1. Inventory turnover: The inventory turnover ratio measures how effectively the company is managing its inventory. A higher ratio is generally preferred as it implies that the company is selling its inventory quickly. PPL Corp's inventory turnover has fluctuated over the years, with a peak in 2022 at 5.91 and a decrease to 5.10 in 2023. Overall, the company has shown relatively efficient inventory management.

2. Receivables turnover: The receivables turnover ratio reflects how efficiently the company collects payments from its customers. A higher ratio indicates a shorter time for the company to collect its receivables. PPL Corp has maintained a fairly consistent receivables turnover ratio over the years, with 2021 showing the highest turnover at 6.10. This suggests that the company effectively collects payments from its customers.

3. Payables turnover: The payables turnover ratio measures how quickly the company pays its suppliers. A higher ratio indicates that the company is paying its payables more quickly. PPL Corp's payables turnover has been relatively stable, with a slight increase from 2.18 in 2022 to 2.33 in 2023. This implies that the company is managing its payments to suppliers efficiently.

4. Working capital turnover: The working capital turnover ratio is not provided for all years but serves as a metric to assess how effectively the company is utilizing its working capital to generate sales. The lack of data for certain years limits a comprehensive analysis of this ratio for PPL Corp.

Overall, the activity ratios of PPL Corp suggest that the company has been effectively managing its inventory, receivables, and payables, contributing to its operational efficiency and financial performance.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities.

Days of inventory on hand (DOH) measures the average number of days it takes for a company to sell its inventory. A decreasing trend in DOH over the years can indicate improved inventory management and faster inventory turnover, leading to reduced holding costs and potential for higher sales.

Days of sales outstanding (DSO) calculates how long it takes for a company to collect its accounts receivable. A decreasing trend in DSO signifies more efficient credit and collection policies, allowing the company to convert sales into cash more quickly.

Number of days of payables shows how many days on average it takes a company to pay its suppliers or trade payables. An increasing trend in this ratio may suggest that the company is taking longer to pay its bills, potentially indicating cash flow difficulties or a deliberate strategy to manage cash more effectively.

Overall, analyzing these activity ratios for PPL Corp indicates improvements in inventory turnover and receivables collection efficiency over the years, along with potential cash management considerations related to payables.

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Long-term

Based on the data provided for PPL Corp's long-term activity ratios, we observe the following trends:

1. Fixed Asset Turnover:
- The fixed asset turnover has remained relatively stable over the past five years, fluctuating between 0.20 and 0.26.
- This ratio indicates that for each dollar invested in fixed assets, the company generates revenue ranging from $0.20 to $0.26.
- A higher fixed asset turnover ratio is generally preferred as it signifies more efficient utilization of fixed assets to generate sales.
- PPL Corp's fixed asset turnover has been consistent, suggesting a reasonable level of efficiency in using its long-term assets to drive revenue.

2. Total Asset Turnover:
- The total asset turnover has also shown consistency over the years, hovering around 0.16 to 0.21.
- This ratio reflects the company's ability to generate sales revenue relative to its total assets.
- A higher total asset turnover ratio indicates better efficiency in asset utilization to generate revenue.
- PPL Corp's total asset turnover ratios suggest that the company has been effectively utilizing its total assets to generate revenue, with a stable trend observed over the years.

In conclusion, PPL Corp has maintained relatively stable long-term activity ratios, indicating consistent efficiency in generating sales revenue relative to its fixed assets and total assets. The company's ability to manage and utilize its assets effectively to drive revenue is reflected in these ratios, which have shown a consistent performance over the past five years.