Williams Companies Inc (WMB)

Short-term

Turnover ratios

The inventory turnover ratio of Williams Companies Inc has shown a decreasing trend from 15.38 in 2020 to 3.00 in 2024. This indicates that the company's ability to sell through its inventory has improved over the years. A higher inventory turnover ratio generally implies efficient inventory management.

The receivables turnover ratio declined from 7.73 in 2020 to 5.64 in 2024. This indicates that the company takes longer to collect payments from its customers. A lower receivables turnover ratio may suggest potential issues with credit policies or difficulties in collecting receivables.

The payables turnover ratio also decreased from 4.34 in 2020 to 0.52 in 2024, indicating that the company is taking longer to pay its suppliers. A declining payables turnover ratio may indicate liquidity issues or strained relationships with suppliers.

The working capital turnover ratio was not provided for any of the years, suggesting that the company may not operate with a significant working capital or that the formula was not applicable for the company's operations.

In summary, while the inventory turnover improved, the receivables and payables turnover ratios deteriorated over the years, indicating potential areas of improvement in managing working capital and optimizing cash flow.

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Average number of days

Based on the provided data on Williams Companies Inc's activity ratios, we can analyze the following:

1. Days of Inventory on Hand (DOH):
- Williams' inventory turnover has shown significant fluctuations over the years. In 2020, the company held inventory for approximately 23.73 days, but this number increased substantially to 219.23 days in 2021. Subsequently, there was a decrease in 2022 to 132.43 days, followed by further improvements in 2023 and 2024, with 126.28 days and 121.81 days, respectively. The higher DOH in 2021 may indicate potential issues related to managing inventory efficiently, but the subsequent declines suggest corrective actions were taken.

2. Days of Sales Outstanding (DSO):
- Williams’ accounts receivable turnover, as reflected in DSO, also experienced variations during the period. In 2020, the company collected receivables in an average of 47.24 days, a figure that increased to 67.94 days in 2021 before rising further to 90.64 days in 2022. The DSO then decreased in 2023 to 55.38 days, followed by a slight increase to 64.74 days in 2024. The rising DSO from 2020 to 2022 may suggest challenges in collecting receivables promptly but the improvements in 2023 and 2024 indicate progress in this area.

3. Number of Days of Payables:
- The number of days Williams takes to pay its suppliers (payables) also exhibited substantial changes over the period. In 2020, the company took approximately 84.10 days to settle its payables. However, there was a significant increase in payment days in 2021 to 1,009.97 days, which may seem unusual or may have resulted from specific circumstances. Subsequent years saw improvements in payables management, with the number of days decreasing to 962.99 days in 2022, 635.52 days in 2023, and 704.24 days in 2024. The decrease in payables days in later years may indicate efforts to optimize cash flow and payment cycles.

In conclusion, the analysis of Williams Companies Inc's activity ratios reveals fluctuations in inventory management, accounts receivable collection, and payables settlement over the years. These ratios provide insights into the company's efficiency in managing working capital components and relationships with suppliers and customers.

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Long-term

Williams Companies Inc's fixed asset turnover has shown a slight improvement from 0.27 in 2020 to 0.35 in 2022, indicating better utilization of its fixed assets to generate sales. However, there was a slight decline to 0.32 in 2023 and a return to 0.27 in 2024. The company's total asset turnover has also increased from 0.17 in 2020 to 0.23 in 2022, reflecting an effective overall asset management. Nevertheless, there was a decrease to 0.19 in 2024. Overall, these ratios suggest that Williams Companies Inc has been able to generate revenue efficiently from both its fixed and total assets during the period under review, albeit with some fluctuations in performance.