Sempra Energy (SRE)

Days of Inventory on Hand (DOH) is a crucial financial ratio that indicates the average number of days a company holds its inventory before selling it. A higher DOH value typically suggests that a company may be facing difficulties in efficiently managing its inventory or that its products are slow-moving.

In the case of Sempra Energy, we observe a gradual increase in the DOH ratio over the years, from 46.94 days as of December 31, 2020, to 60.67 days as of December 31, 2024. This trend indicates that Sempra Energy is taking longer to convert its inventory into sales, which may imply inventory management challenges or potential issues with demand forecasting.

A rising DOH ratio could lead to increased holding costs, storage expenses, and the risk of obsolescence. Companies strive to strike a balance between maintaining sufficient inventory levels to meet customer demand and minimizing excess inventory that could tie up capital.

It would be advisable for Sempra Energy to conduct a detailed analysis of its inventory management processes to identify areas for improvement and optimize inventory turnover. Streamlining inventory control mechanisms, refining demand forecasting techniques, and implementing efficient supply chain management strategies could help Sempra Energy enhance its operational efficiency and profitability in the long run.

Peer comparison

Dec 31, 2024