Southern Company (SO)

Days of inventory on hand (DOH)

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Inventory turnover		4.67	4.61	4.72	4.39	4.04	4.82	5.72	6.62	6.90	6.43	6.75	6.65	5.54	5.37	5.45	4.99	4.21	4.29	4.55	5.10
DOH	days	78.14	79.13	77.31	83.08	90.32	75.71	63.80	55.17	52.93	56.80	54.08	54.89	65.85	67.92	67.01	73.08	86.67	85.16	80.24	71.58

December 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 4.67
= 78.14

The days of inventory on hand (DOH) is a financial ratio that measures how long it takes for a company to sell its inventory. A lower DOH value indicates that the company is able to sell its inventory more quickly, which is generally favorable as it reduces the risk of holding excessive or obsolete inventory.

Analyzing the DOH trend of Southern Company from March 31, 2020, to December 31, 2024, we observe fluctuations in the number of days it takes to sell its inventory. The DOH values ranged from a low of 52.93 days on December 31, 2022, to a high of 90.32 days on December 31, 2023.

The trend in Southern Company's DOH indicates some volatility in inventory management over the years. Generally, a lower DOH is preferred as it suggests efficient inventory turnover and management. However, a significantly low DOH may indicate inventory shortages or difficulties in meeting customer demand.

It is essential for Southern Company to maintain a balance in managing its inventory levels to meet customer demand effectively while minimizing holding costs and obsolescence risks. Regular monitoring and evaluation of inventory turnover ratios like DOH can help the company optimize its inventory management strategies for improved efficiency and profitability.