WEC Energy Group Inc (WEC)

Short-term

Turnover ratios

The activity ratios for WEC Energy Group Inc provide insights into how efficiently the company manages its inventory, receivables, and payables.

1. Inventory turnover: This ratio measures how many times a company's inventory is sold and replaced over a period. The downward trend in WEC Energy Group's inventory turnover from 5.40 in 2022 to 4.12 in 2023 indicates a decrease in the speed at which the company is selling its inventory. This could be due to changes in demand, inventory management issues, or inefficiencies in production and distribution processes.

2. Receivables turnover: The receivables turnover ratio shows how effectively a company collects on its credit sales. WEC Energy Group's receivables turnover ratio has been fluctuating over the past five years but remained relatively stable. A higher ratio indicates a more efficient collection of receivables, which suggests that the company has effective credit policies and is able to convert sales into cash quickly.

3. Payables turnover: This ratio reflects how quickly a company pays off its suppliers. WEC Energy Group's payables turnover ratio has shown fluctuations but generally increased from 2.63 in 2020 to 3.56 in 2023. A higher payables turnover ratio may indicate that the company is managing its payables effectively and taking advantage of credit terms while maintaining good relationships with its suppliers.

4. Working capital turnover: The data provided does not include information on working capital turnover for WEC Energy Group Inc. This ratio measures how effectively a company utilizes its working capital to generate sales. A higher working capital turnover ratio typically indicates efficient management of working capital and strong sales generation capabilities.

In conclusion, WEC Energy Group Inc's activity ratios suggest varying levels of efficiency in managing its inventory, receivables, and payables over the past five years. Monitoring these ratios can help stakeholders assess the company's operational performance and identify areas for improvement in its working capital management.

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Average number of days

To analyze WEC Energy Group Inc.'s activity ratios based on the provided data, we will focus on the following key metrics:

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates the number of days it takes for the company to turn its inventory into sales.
- In 2023, there was an increase in DOH to 88.67 days from 67.58 days in 2022, suggesting that the company held inventory for a longer period.
- A higher DOH can tie up working capital and may indicate inefficiency in managing inventory levels efficiently.

2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for the company to collect revenue after a sale is made.
- The trend in DSO shows an increase to 61.70 days in 2023 from 57.08 days in 2019, indicating a longer collection period.
- Higher DSO can impact cash flow and working capital, potentially signaling challenges in timely collections from customers.

3. Number of Days of Payables:
- This metric reflects the average number of days the company takes to pay its suppliers.
- The trend in the number of days of payables shows fluctuations, with a decrease in 2023 to 102.55 days from 123.73 days in 2019.
- Longer payables period may indicate better cash flow management as the company delays payments to suppliers.

Overall, the analysis of WEC Energy Group Inc.'s activity ratios suggests that the company experienced an increase in inventory holding period and sales collection days in 2023, potentially signaling inefficiencies in inventory management and slower cash conversion cycles. However, the decrease in the number of days of payables indicates improved cash flow management through extended payment terms with suppliers. Continued monitoring of these ratios is essential to assess the company's operational efficiency and financial health.

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Long-term

WEC Energy Group Inc's long-term activity ratios provide insights into the efficiency of the company in generating sales relative to its assets. The fixed asset turnover ratio has experienced fluctuation over the past five years, ranging from 0.28 in 2023 to 0.32 in 2019. This ratio indicates that for every dollar of fixed assets, the company generated an average of 0.28 to 0.32 times in sales revenue. The decreasing trend in fixed asset turnover suggests a potential decline in the efficiency of utilizing fixed assets to generate revenue.

Meanwhile, the total asset turnover ratio also demonstrates variability, with values ranging from 0.20 in 2023 to 0.22 in 2019. This ratio indicates the company's ability to generate sales in relation to its total assets. The declining trend in total asset turnover suggests that the company may be becoming less efficient in utilizing its total assets to generate revenue over the years.

Overall, the decreasing trends in both fixed asset turnover and total asset turnover ratios may indicate a potential inefficiency in asset utilization within WEC Energy Group Inc, raising concerns about the company's operational effectiveness and potentially impacting its long-term financial performance. Further analysis and comparison with industry benchmarks would be needed to assess the company's performance comprehensively.