Southern Company (SO)

Activity ratios

Short-term

Turnover ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 0.56 0.39 0.42 0.45 0.46 0.58 0.67 0.82 0.97 0.71 0.79 0.71 0.57 0.84 0.89 0.91 0.66 0.75 0.78 0.91
Receivables turnover 10.18 9.71 15.64 16.08 14.16 13.07 11.85 12.44 13.38 12.77 13.70 13.36 12.46 12.01 13.48 13.56 13.69 12.38 13.72 13.50
Payables turnover 0.65 0.42 0.50 0.53 0.35 0.51 0.52 0.76 1.05 0.72 0.80 0.76 0.61 1.08 1.19 1.22 0.75 0.92 0.85 0.94
Working capital turnover — — — — — — — — — — — — — — — — — — — —

The activity ratios for Southern Company indicate the efficiency with which the company manages its resources.

1. Inventory Turnover:
- Southern Company's inventory turnover has shown a decreasing trend over the quarters, from 4.42 in Q4 2022 to 2.22 in Q4 2023. This could indicate that the company is holding inventory for a longer period, possibly due to slower sales or production issues.

2. Receivables Turnover:
- The receivables turnover ratio has been relatively stable, with slight fluctuations, ranging from 7.34 to 9.98. This suggests that Southern Company efficiently collects its receivables from customers.

3. Payables Turnover:
- The payables turnover ratio has shown an increasing trend over the quarters, indicating that the company is taking longer to pay its creditors. This could be a strategic move to manage cash flow efficiently or negotiate better payment terms.

4. Working Capital Turnover:
- Data for the working capital turnover ratio is not available in the provided table. This ratio would have provided insights into how effectively Southern Company utilizes its working capital resources to generate sales.

In conclusion, while Southern Company's receivables turnover reflects efficient collection practices, the decreasing inventory turnover and increasing payables turnover ratios may require further examination to understand the underlying reasons and implications for the company's operations.

Average number of days

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 647.00 939.51 875.70 806.87 799.59 626.88 547.38 447.06 378.00 514.14 464.63 510.95 644.06 435.75 409.74 401.83 552.71 487.79 465.32 399.97
Days of sales outstanding (DSO) days 35.86 37.61 23.34 22.69 25.77 27.94 30.81 29.34 27.29 28.58 26.65 27.32 29.29 30.38 27.07 26.91 26.67 29.49 26.60 27.03
Number of days of payables days 559.37 878.03 736.80 693.91 1,052.88 719.95 697.84 478.52 348.15 507.54 454.33 479.06 598.50 338.60 307.52 299.87 489.52 398.37 429.49 389.27

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. Let's analyze Southern Company's activity ratios based on the provided data:

1. Days of Inventory on Hand (DOH):
- DOH measures how many days on average it takes for the company to sell its inventory.
- Southern Company's DOH has been fluctuating over the quarters, ranging from 86.25 days to 164.18 days.
- A higher DOH indicates slower inventory turnover, which can tie up working capital and result in higher holding costs.

2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for the company to collect payment after making a sale.
- Southern Company's DSO has shown some variability, ranging from 36.56 days to 47.22 days.
- A lower DSO is generally favorable as it indicates faster collection of receivables and improved cash flow.

3. Number of Days of Payables:
- This ratio reflects the average number of days it takes for the company to pay its suppliers.
- Southern Company's days of payables range from 74.17 days to 141.94 days.
- A higher number of days of payables can indicate that the company is effectively using trade credit to manage its cash flow.

Overall, Southern Company's activity ratios suggest some fluctuations in the management of inventory, receivables, and payables. Monitoring and managing these ratios effectively can help the company optimize its working capital and improve overall operational efficiency.

Long-term

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 0.25 0.27 0.29 0.30 0.31 0.30 0.28 0.26 0.25 0.25 0.24 0.24 0.23 0.23 0.24 0.25 0.26 0.27 0.27 0.28
Total asset turnover 0.18 0.19 0.20 0.22 0.22 0.21 0.20 0.19 0.18 0.18 0.17 0.17 0.17 0.16 0.17 0.18 0.18 0.19 0.19 0.20

Southern Company's long-term activity ratios provide insights into how efficiently the company is utilizing its assets. The fixed asset turnover ratio has shown a gradual decline from 0.31 in Q4 2022 to 0.25 in Q4 2023, indicating that, on average, the company generated $0.25 in sales for every $1 invested in fixed assets during the most recent quarter.

The decreasing trend in fixed asset turnover may signify potential inefficiencies in utilizing the company's fixed assets to generate revenue, potentially leading to underutilization or aging of assets.

On the other hand, the total asset turnover ratio has also shown a decline, from 0.22 in Q4 2022 to 0.18 in Q4 2023. This ratio indicates the company's ability to generate sales from all its assets, including fixed and current assets. The decreasing trend in total asset turnover suggests that Southern Company may be facing challenges in efficiently utilizing all its assets to drive sales.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios may raise concerns about Southern Company's asset utilization efficiency and its potential impact on the company's profitability in the long term. Further analysis and monitoring of these ratios in the future quarters will be essential to assess the company's operational performance and efficiency in managing its assets.