Sempra Energy (SRE)

Short-term

Turnover ratios

The activity ratios of Sempra Energy provide insights into the efficiency of the company in managing its inventory, receivables, and payables.

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times a company's inventory is sold and replaced over a period.
- Sempra Energy's inventory turnover has decreased from 7.78 in 2020 to 6.02 in 2024. A declining trend may indicate potential issues such as overstocking or slowing sales.

2. Receivables Turnover:
- The receivables turnover ratio assesses how effectively a company collects payment from its customers.
- Sempra Energy's receivables turnover fluctuated over the years, with a peak at 7.35 in 2023. A higher turnover ratio suggests quicker collection of receivables, which could signify efficient credit policies.

3. Payables Turnover:
- The payables turnover ratio evaluates how well a company manages its payments to suppliers.
- Sempra Energy's payables turnover remained relatively stable, ranging between 1.26 and 1.58. A consistent payables turnover ratio may indicate consistent payment practices with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio is not provided for Sempra Energy for any of the years.
- This ratio could have shown how efficiently the company utilized its working capital to generate sales revenue. The absence of data may restrict a comprehensive analysis of this aspect of the company's operations.

Overall, evaluating these activity ratios helps assess Sempra Energy's operational efficiency and effectiveness in managing its resources.

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Average number of days

The activity ratios of Sempra Energy provide insights into the efficiency of the company's operations and management of its working capital.

1. Days of Inventory on Hand (DOH):
- The company's DOH has been increasing steadily from 46.94 days in 2020 to 60.67 days in 2024. This indicates that it takes longer for Sempra Energy to sell its inventory, which may suggest inventory management inefficiencies or changes in the nature of its business activities.

2. Days of Sales Outstanding (DSO):
- The DSO for Sempra Energy fluctuated over the years, with a peak at 70.83 days in 2022 and a low of 49.69 days in 2023. This metric reflects the average number of days it takes for the company to collect revenue from its customers. The decreasing trend from 2022 to 2024 could imply that the company has been improving its credit and collection policies.

3. Number of Days of Payables:
- Sempra Energy's days of payables have shown some variation but have generally decreased from 230.58 days in 2020 to 265.47 days in 2024. A decrease in this ratio suggests that the company is taking fewer days to pay its suppliers, possibly indicating tighter working capital management or renegotiated payment terms with vendors.

Overall, while the increasing DOH and DSO may raise concerns about the efficiency of inventory management and collection processes, the decreasing number of days of payables could indicate a more proactive approach to managing cash flows and vendor relationships. It is essential for Sempra Energy to continue monitoring and optimizing these activity ratios to improve operational effectiveness and liquidity management.

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Long-term

The analysis of Sempra Energy's long-term activity ratios provides insights into the efficiency of the company in utilizing its assets.

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how effectively the company is using its fixed assets to generate revenue. Over the years from 2020 to 2024, the fixed asset turnover ratio has shown a slightly increasing trend, from 0.28 to 0.17. This indicates that the company has been able to generate more revenue relative to its investment in fixed assets, showing improving efficiency in utilizing its long-term assets.

2. Total Asset Turnover: The total asset turnover ratio reflects how well the company is utilizing all its assets to generate sales. The total asset turnover ratio has also shown a fluctuating trend over the same period, starting at 0.17 in 2020, peaking at 0.19 in 2023, and then dropping to 0.14 in 2024. This suggests that while the company's efficiency in generating sales from its total assets improved initially, there was a decline in the ability to utilize assets effectively in the most recent year.

Overall, the analysis of Sempra Energy's long-term activity ratios indicates that the company has shown mixed performance in efficiently utilizing its fixed and total assets to generate revenue. Efforts to improve asset turnover ratios can enhance profitability and overall financial performance.