As you close out 2015, take a look at the following key electric co-op performance indicators in Kentucky. Dean Dorton analyzed 11 of the larger electric co-op financial statements as provided to the Public Service Commission.
The industry looks stable with equity as a percentage of total assets climbing from 37% to 43% and an increase in current ratio from 1.18 to 1.25. Accounts receivable and accounts payable continue to turnover about every 12th day. Operating margin dipped from 6% to 5% and the group continues to reinvest in itself at the rate of 8% of revenue.
The industry is highly leveraged to fund its capital with debt exceeding its equity. The purchase of energy sits at 74% of revenue and represents one of the main risks going forward as highlighted in Dean Dorton’s top 10 electric co-op list for 2016.
| 2014 | 2013 | |
| Debt to equity | 1.39 | 1.46 |
| Equity to total assets | 43% | 37% |
| Current ratio | 1.25 | 1.18 |
| Accounts payable turnover | 12.65 | 11.82 |
| Accounts receivable turnover | 12.59 | 12.82 |
| Operating margin | 5% | 6% |
| Cost of purchase % | 74% | 74% |
| Plant additions % | 8% | 8% |
For more information, contact Bill Kohm at bkohm@deandorton.com or 859-425-7625.
