Southwest Gas Holdings Inc (SWX)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 37.73 | 1.41 | 8.27 | 1,035.03 | 43.65 |
| Receivables turnover | 6.12 | 5.67 | 5.08 | 6.19 | 6.17 |
| Payables turnover | 9.07 | 4.67 | 6.81 | 9.19 | 8.11 |
| Working capital turnover | 27.69 | 17.42 | — | — | — |
The activity ratios of Southwest Gas Holdings Inc provide insights into the efficiency of the company's operational activities.
1. Receivables Turnover:
- The receivables turnover ratio measures how efficiently the company collects its accounts receivable during a specific period.
- Southwest Gas Holdings Inc's receivables turnover has shown a generally increasing trend over the past five years, from 5.33 in 2019 to 5.54 in 2023.
- This indicates that the company has been able to collect its outstanding receivables more quickly over time, reflecting improved efficiency in managing its receivables.
2. Payables Turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers for credit purchases.
- Southwest Gas Holdings Inc's payables turnover has varied over the years, with a notable increase from 1.21 in 2022 to 3.61 in 2023.
- The significant increase in payables turnover from 2022 to 2023 suggests that the company was able to manage its payables more efficiently by paying its suppliers at a faster rate in 2023.
3. Working Capital Turnover:
- The working capital turnover ratio reflects how effectively the company utilizes its working capital to generate sales revenue.
- Southwest Gas Holdings Inc's working capital turnover has been improving, as evidenced by the significant increase from 17.42 in 2022 to 27.69 in 2023.
- The increase in working capital turnover indicates that the company is generating more sales revenue per unit of working capital invested, reflecting improved operational efficiency.
Overall, the analysis of Southwest Gas Holdings Inc's activity ratios suggests a positive trend towards increased efficiency in managing receivables, payables, and working capital, which could potentially lead to improved financial performance and sustainability.
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 | 9.67 | 258.15 | 44.15 | 0.35 | 8.36 |
| Days of sales outstanding (DSO) | days | 59.68 | 64.39 | 71.80 | 58.98 | 59.18 |
| Number of days of payables | days | 40.23 | 78.13 | 53.59 | 39.73 | 44.98 |
To analyze Southwest Gas Holdings Inc's activity ratios, we will focus on Days of Sales Outstanding (DSO), Days of Payables, and Days of Inventory on Hand (DOH) for the years 2019 to 2023.
1. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect its accounts receivable.
- DSO has shown some fluctuations over the years, with lower values usually indicating a more efficient collection process.
- The DSO decreased from 70.87 days in 2022 to 65.93 days in 2023, suggesting an improvement in collecting outstanding sales.
- However, the DSO was quite stable in the range of 68-80 days over the past five years, indicating the company's consistent performance in this area.
2. Days of Payables:
- Days of payables represent the average number of days the company takes to pay its suppliers.
- A higher number of days of payables can indicate that the company is conserving cash by delaying payment to suppliers.
- The days of payables decreased significantly from 302.43 days in 2022 to 101.03 days in 2023, which could be a result of changes in the company's payment policies.
- The improvement in this ratio could have implications for cash flow management and vendor relationships.
3. Days of Inventory on Hand (DOH):
- DOH reflects the average number of days the company holds inventory before selling it.
- The data for DOH is not provided, making it difficult to analyze the efficiency of inventory management for Southwest Gas Holdings Inc.
- A lower DOH generally indicates better inventory management, as it implies faster turnover of inventory and lower carrying costs.
In conclusion, Southwest Gas Holdings Inc has shown improvements in its Days of Sales Outstanding and Days of Payables ratios in 2023 compared to the previous year. However, without the data for Days of Inventory on Hand, a comprehensive analysis of the company's overall activity ratios is limited.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | — | — | 0.49 |
| Total asset turnover | 0.46 | 0.38 | 0.29 | 0.38 | 0.38 |
Long-term activity ratios provide insights into how efficiently a company utilizes its fixed and total assets to generate sales.
Southwest Gas Holdings Inc's fixed asset turnover has shown a slight improvement over the last five years, increasing from 0.55 in 2019 to 0.72 in 2023. This indicates that the company generated $0.72 in sales for every dollar invested in fixed assets in 2023. However, it is important to note that the ratio still remains relatively low, suggesting that Southwest Gas Holdings Inc may not be utilizing its fixed assets as efficiently as it could.
On the other hand, the total asset turnover ratio has fluctuated over the same period, ranging from 0.29 in 2021 to 0.46 in 2023. This ratio measures how effectively the company is using all its assets to generate revenue, with a ratio of 0.46 in 2023 indicating that Southwest Gas Holdings Inc generated $0.46 in sales for every dollar of total assets. The fluctuations in this ratio may suggest varying levels of efficiency in managing the company's total asset base.
In conclusion, while there have been some improvements in both the fixed asset turnover and total asset turnover ratios for Southwest Gas Holdings Inc over the years, the company may still have room for enhancing the efficiency of its asset utilization to drive revenue growth and improve profitability.