Southern Company (SO)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 25,253,000 | 29,279,000 | 23,113,000 | 20,375,000 | 21,419,000 |
| Property, plant and equipment | US$ in thousands | 99,844,000 | 94,570,000 | 91,108,000 | 87,634,000 | 83,080,000 |
| Fixed asset turnover | 0.25 | 0.31 | 0.25 | 0.23 | 0.26 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $25,253,000K ÷ $99,844,000K
= 0.25
The fixed asset turnover ratio of Southern Company has fluctuated over the past five years. It indicates the company's efficiency in generating revenue from its investments in fixed assets. A higher ratio is generally preferred as it suggests that the company is effectively utilizing its fixed assets to generate sales.
In 2023, the fixed asset turnover ratio decreased to 0.25 from 0.31 in 2022, indicating a decline in the company's ability to generate revenue from its fixed assets. This may be a concern as it suggests that the company may not be effectively utilizing its fixed assets to generate sales.
Looking back at the trend over the five-year period, the ratio has varied between 0.23 and 0.31, with no clear consistent pattern. This inconsistency indicates potential fluctuations in the company's operational efficiency in utilizing its fixed assets to drive revenue.
Further analysis is needed to understand the specific factors driving these fluctuations in the fixed asset turnover ratio and to determine whether there are any operational or strategic changes that could be made to improve efficiency in this area.
Peer comparison
Dec 31, 2023