UGI Corporation (UGI)

Short-term

Turnover ratios

The activity ratios of UGI Corporation for the past five years show varying trends in the efficiency of managing inventory, receivables, payables, and working capital.

The inventory turnover ratio, which measures how efficiently the company is managing its inventory, has fluctuated over the years. It peaked in 2023 at 22.68, indicating a high rate of inventory turnover, but decreased in subsequent years. In 2024, the ratio was 14.39, suggesting a slower turnover of inventory compared to the previous year.

The receivables turnover ratio, which indicates how quickly the company is collecting payments from customers, has also shown fluctuations. While it remained relatively stable between 2021 and 2023, there was a slight decrease in 2024 to 9.42, indicating a longer time to collect receivables compared to the previous year.

The payables turnover ratio, which measures the speed at which the company pays its suppliers, increased from 2019 to 2020 before experiencing fluctuations in the following years. In 2024, the ratio was 10.88, suggesting that the company paid its suppliers at a faster rate compared to 2023.

The working capital turnover ratio, which demonstrates how efficiently the company is using its working capital to generate sales, was not provided for 2020 and 2021. However, in 2022 and 2023, the ratio was 7.44 and 7.65, respectively, indicating that the company generated sales revenue relative to its working capital during those years.

Overall, the activity ratios of UGI Corporation reveal varying levels of efficiency in managing inventory, accounts receivable, accounts payable, and working capital over the past five years. Analyzing these ratios provides insights into the company's operational effectiveness and financial health.

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Average number of days

Activity ratios measure how efficiently a company manages its assets and liabilities. Let's analyze UGI Corporation's activity ratios for the past five years based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how long, on average, inventory is held before being sold.
- UGI has shown fluctuations in inventory management over the past five years.
- In 2024, the DOH increased significantly to 25.36 days compared to the previous year, indicating a longer time it takes to sell inventory.
- The increase in DOH may suggest inefficiencies in inventory management or changes in the company's sales patterns.

2. Days of Sales Outstanding (DSO):
- The DSO indicates the average number of days it takes for the company to collect revenue after a sale is made.
- UGI has maintained relatively stable DSO levels over the past five years.
- The DSO was 38.73 days in 2024, slightly higher than the previous year but within a consistent range.
- A stable DSO suggests that UGI has been effective in collecting payments from customers in a timely manner.

3. Number of Days of Payables:
- This ratio measures the average number of days it takes for a company to pay its suppliers.
- UGI has shown fluctuations in its days of payables over the past five years.
- In 2024, the number of days of payables increased to 33.56 days, indicating a longer average time to pay suppliers compared to the previous year.
- The increase in days of payables may suggest changes in UGI's payment terms with suppliers or cash flow management strategies.

Overall, UGI's activity ratios for inventory management, accounts receivable collection, and accounts payable show varying trends over the years. It is essential for UGI to evaluate and improve its working capital management to maintain efficiency in its operations and optimize cash flow.

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Long-term

The fixed asset turnover ratio for UGI Corporation has been showing a declining trend over the past five years, decreasing from 1.26 in 2022 to 0.83 in 2024. This suggests that the company is generating less revenue for each dollar invested in fixed assets, which may indicate inefficiency in utilizing its long-term assets effectively.

In contrast, the total asset turnover ratio has been relatively stable, oscillating between 0.45 and 0.58 during the same period. This indicates that UGI Corporation is generating revenue in relation to its total assets at a consistent rate, without substantial fluctuations over the years.

Overall, while the total asset turnover ratio remains relatively steady, the declining trend in the fixed asset turnover ratio may raise concerns about the company's ability to optimize the utilization of its long-term assets to generate revenue efficiently over the years. This could warrant further analysis into the company's asset management strategies and operational performance.