Sempra Energy (SRE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.48 | 7.09 | 6.79 | 7.78 | 8.14 |
| Receivables turnover | 7.35 | 5.15 | 5.92 | 6.65 | 7.71 |
| Payables turnover | 1.28 | 1.26 | 1.43 | 1.58 | 1.60 |
| Working capital turnover | — | — | — | — | — |
Sempra's inventory turnover has been relatively stable over the past five years, ranging from 7.75 to 11.12 times. This indicates that the company is efficiently managing its inventory, with a higher turnover ratio suggesting that Sempra is selling and replenishing its inventory more frequently.
The receivables turnover for Sempra has fluctuated over the same period, with a high of 5.89 in 2023 and a low of 4.14 in 2022. This suggests that the company is collecting its accounts receivable at varying rates, perhaps indicating changes in credit policies or customer payment behavior.
In terms of payables turnover, Sempra's performance has also varied, with the ratio ranging from 1.58 to 1.98. A higher payables turnover ratio typically indicates that the company is paying its suppliers more quickly, which could suggest strong liquidity or negotiation power with suppliers.
Unfortunately, there is no data provided for working capital turnover for Sempra, which would have given insight into how effectively the company is utilizing its working capital to generate sales revenue. This ratio could have provided a more comprehensive view of Sempra's operational efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 56.33 | 51.50 | 53.74 | 46.94 | 44.86 |
| Days of sales outstanding (DSO) | days | 49.69 | 70.83 | 61.69 | 54.93 | 47.36 |
| Number of days of payables | days | 284.59 | 289.98 | 255.44 | 230.58 | 228.81 |
Activity ratios reflect how efficiently a company manages its assets and liabilities to generate revenue.
1. Days of Inventory on Hand (DOH): This ratio measures how long it takes for Sempra to sell its inventory. A lower number indicates a more efficient inventory management. Sempra's DOH has been fluctuating over the years, with an increase in 2021 followed by a decrease in 2022. In 2023, the DOH decreased further to 37.90 days, indicating improved inventory turnover efficiency compared to the previous year.
2. Days of Sales Outstanding (DSO): DSO measures how long it takes for Sempra to collect revenue from its customers. A lower DSO signifies effective credit management practices. Sempra's DSO has been inconsistent, with fluctuations in the past years. In 2023, the DSO decreased significantly to 61.93 days, indicating a shorter collection period compared to the previous two years.
3. Number of Days of Payables: This ratio shows how long Sempra takes to pay its suppliers. A higher number suggests that the company is taking longer to settle its payables. Sempra's days of payables have been relatively high over the years, indicating a longer payment period. In 2023, the number of days of payables increased to 191.46 days, reflecting a further extension in the payment cycle.
Overall, Sempra's activity ratios show improvements in inventory turnover and collection efficiency in 2023, while the payment period to suppliers extended further. These changes could be due to various factors affecting Sempra's operations and relationships with suppliers and customers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.23 | 0.30 | 0.29 | 0.28 | 0.30 |
| Total asset turnover | 0.19 | 0.18 | 0.18 | 0.17 | 0.16 |
The analysis of Sempra's long-term activity ratios reveals the efficiency with which the company is utilizing its fixed assets and total assets to generate revenue.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio has remained relatively stable over the past five years, averaging around 0.30. This indicates that for every dollar invested in fixed assets, Sempra generates approximately $0.30 in sales revenue.
- The consistent nature of this ratio suggests that Sempra has been successful in efficiently utilizing its fixed assets to drive sales, thereby maximizing the return on its investment in property, plant, and equipment.
2. Total Asset Turnover:
- The total asset turnover ratio has also shown a consistent increasing trend over the years, reaching 0.19 in 2023. This ratio indicates that for every dollar of total assets, Sempra generates approximately $0.19 in sales revenue.
- The improvement in the total asset turnover ratio signifies that Sempra has been effectively utilizing its overall asset base to drive revenue growth, reflecting operational efficiency and effective resource allocation.
Overall, the steady performance in both fixed asset turnover and total asset turnover ratios suggests that Sempra has been effectively managing its assets to generate sales, indicating operational efficiency and effectiveness in the utilization of resources to drive revenue growth over the years.