Essential Utilities Inc (WTRG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 9.20 | 8.24 | 6.09 | 8.13 | 11.89 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | — | — | — | — | — |
Based on the provided data, Essential Utilities Inc's activity ratios can be analyzed as follows:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times during a period the company sells and replaces its inventory.
- Essential Utilities Inc's inventory turnover has decreased from 11.89 in 2020 to 9.20 in 2024.
- A decreasing trend in inventory turnover may suggest that Essential Utilities Inc is taking longer to sell its inventory, which could tie up capital and impact profitability.
2. Receivables Turnover:
- Receivables turnover ratio evaluates how efficiently a company collects payments from its customers on credit sales during a specific period.
- The data provided shows that the receivables turnover ratio is not available for any of the years, implying that this information was not disclosed or the company may not have credit sales.
3. Payables Turnover:
- Payables turnover ratio measures how quickly a company pays its suppliers for credit purchases during a given period.
- The data indicates that Essential Utilities Inc did not provide information on the payables turnover for any of the years, making it challenging to assess the efficiency of the company's payment to suppliers.
4. Working Capital Turnover:
- Working capital turnover ratio reflects how effectively a company utilizes its working capital to generate sales.
- The data reveals that the working capital turnover ratio is not available for any of the years, suggesting that Essential Utilities Inc did not disclose this information, making it difficult to assess the company's operational efficiency in utilizing its working capital.
In summary, based on the provided data, Essential Utilities Inc's inventory turnover has been declining over the years, while information regarding receivables turnover, payables turnover, and working capital turnover is not available. Monitoring these activity ratios can provide insights into the company's operational efficiency and financial performance.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 39.67 | 44.32 | 59.97 | 44.89 | 30.70 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Essential Utilities Inc's Days of Inventory on Hand (DOH) ratio has shown an increase over the years from 30.70 days in December 2020 to 39.67 days in December 2024. This indicates that the company is holding inventory for a longer period, which may tie up its working capital and increase storage costs.
The Days of Sales Outstanding (DSO) and Number of Days of Payables ratios are not provided for the period under review, indicating a lack of information regarding the company's accounts receivable collection period and accounts payable payment period. Additional information on these ratios would have been beneficial for a more comprehensive analysis of Essential Utilities Inc's overall activity efficiency.
Overall, based on the available data, Essential Utilities Inc needs to closely monitor its inventory management practices to optimize its working capital and improve its operational efficiency. Further insights on the company's accounts receivable and accounts payable management would provide a more holistic view of its overall activity ratios and financial performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 0.21 | 0.18 | 0.15 |
| Total asset turnover | 0.12 | 0.12 | 0.15 | 0.13 | 0.11 |
Long-term activity ratios provide insights into how efficiently Essential Utilities Inc utilizes its assets to generate revenue. The fixed asset turnover ratio, which measures the company's ability to generate sales from its investment in fixed assets, has been improving over the past few years. It increased from 0.15 in December 31, 2020, to 0.21 in December 31, 2022. This indicates that Essential Utilities Inc is effectively using its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio, which assesses how well the company utilizes all its assets to generate sales, shows fluctuations. It increased from 0.11 in December 31, 2020, to 0.15 in December 31, 2022, suggesting an improvement in asset utilization efficiency. However, there was a slight decline to 0.12 in December 31, 2023, which could indicate challenges in optimizing the use of assets to generate revenue.
Overall, Essential Utilities Inc's long-term activity ratios suggest that the company has been enhancing its operational efficiency in generating revenue from both fixed and total assets, with some fluctuations observed in recent years.