UGI Corporation (UGI)

Short-term

Turnover ratios

The activity ratios provide insights into how efficiently UGI Corp. is managing its inventory, receivables, payables, and working capital. Let's analyze each ratio to understand UGI Corp.'s activity performance over the past five years.

1. Inventory Turnover:
UGI Corp.'s inventory turnover has fluctuated over the past five years, with a significant increase from 2021 to 2023. A higher inventory turnover indicates efficient inventory management and possibly a faster conversion of inventory into sales. The sharp increase in 2023 suggests that UGI Corp. has improved its inventory management, which could lead to reduced carrying costs and improved cash flow.

2. Receivables Turnover:
The receivables turnover ratio indicates how efficiently UGI Corp. is collecting its receivables. The trend shows a slight increase in receivables turnover from 2021 to 2023, indicating that the company is collecting its receivables more frequently. This implies effective credit and collection policies, which can lead to improved cash flow and lower risk of bad debts.

3. Payables Turnover:
UGI Corp.'s payables turnover ratio has also fluctuated over the years, with an increasing trend from 2021 to 2023. A higher payables turnover ratio suggests that the company is paying its suppliers more frequently, which may indicate strong negotiation power and good relationships with suppliers. It can also lead to improved working capital management and potentially lower financing costs.

4. Working Capital Turnover:
It's important to note that the working capital turnover data is incomplete, with missing values for some years. The available data shows a consistent turnover for 2021 and 2022, indicating that UGI Corp. is effectively using its working capital to generate sales. However, the absence of data for other years limits a comprehensive analysis of this ratio.

In summary, the analysis of UGI Corp.'s activity ratios suggests improvements in inventory turnover, receivables turnover, and payables turnover over the past few years. These trends indicate enhanced efficiency in managing inventory, collecting receivables, and paying suppliers, which can positively impact the company's cash flow and overall financial performance.

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Average number of days

To analyze UGI Corp.'s activity ratios, we will focus on the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables. These ratios provide insights into the efficiency of UGI Corp.'s inventory management, accounts receivable collection, and accounts payable.

1. Days of Inventory on Hand (DOH):
The DOH measures how many days, on average, UGI Corp. holds inventory before selling it. A lower value indicates efficient inventory management. Over the past five years, UGI Corp.'s DOH has fluctuated. In Sep 2023, the DOH decreased to 22.78 days from 40.64 days in Sep 2022. This suggests that UGI Corp. improved its inventory turnover, potentially through better demand forecasting or supply chain optimization.

2. Days of Sales Outstanding (DSO):
The DSO reflects how long it takes UGI Corp. to collect payment from its customers. A lower DSO is favorable as it indicates faster collection of accounts receivable. UGI Corp.'s DSO has also shown fluctuations over the years. In Sep 2023, the DSO decreased to 38.72 days from 46.16 days in Sep 2022. The decrease in DSO suggests more efficient credit and collection policies, leading to quicker cash conversion.

3. Number of Days of Payables:
This ratio measures the number of days UGI Corp. takes to pay its suppliers. A higher value implies that UGI Corp. takes longer to pay its bills, potentially benefiting from more extended payment terms. Over the years, UGI Corp.'s payables period has varied. In Sep 2023, the number of days of payables decreased to 32.25 days from 54.45 days in Sep 2022. This decrease might indicate a more efficient cash management approach or negotiation with suppliers.

Overall, UGI Corp.'s activity ratios display fluctuating trends over the years, suggesting the company's ongoing efforts to manage its inventory, accounts receivable, and accounts payable more effectively. It's essential for UGI Corp. to continue monitoring and improving these activity ratios to enhance operational efficiency and optimize its working capital management.

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Long-term

The long-term activity ratios of UGI Corp. provide insights into the company's efficiency in utilizing its fixed and total assets to generate revenue over the past five years.

The fixed asset turnover ratio has exhibited fluctuations during the period, indicating changes in the company's ability to generate sales from its fixed assets. The ratio decreased from 1.26 in 2022 to 0.99 in 2021, before increasing to 1.04 in 2023. This suggests that UGI Corp. may have experienced challenges in efficiently utilizing its fixed assets in 2021, but has shown improvement in 2023.

On the other hand, the total asset turnover ratio has remained relatively stable, hovering around 0.55 for the years 2019 and 2022. The slight decrease in 2021 (0.45) and 2020 (0.47) could indicate a temporary inefficiency in generating sales from total assets during those years.

Overall, UGI Corp.'s long-term activity ratios indicate varying levels of efficiency in generating sales from both fixed and total assets over the five-year period, with the company demonstrating an ability to adapt and improve its asset utilization over time.