Allete Inc (ALE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.41 | 5.12 | 1.30 | 4.30 | 5.35 |
| Receivables turnover | 8.73 | 11.68 | 9.40 | 9.56 | 8.80 |
| Payables turnover | 1.91 | 8.78 | 5.74 | 3.79 | 3.61 |
| Working capital turnover | 49.35 | 20.77 | 872.61 | — | — |
Based on the provided data, let's analyze the activity ratios of Allete Inc:
1. Inventory Turnover:
- The inventory turnover ratio shows how many times a company's inventory is sold and replaced over a period. A higher ratio indicates efficient inventory management.
- Allete Inc's inventory turnover decreased from 2020 to 2021 but improved in 2023 compared to 2022. The ratio in 2024 saw a significant decrease from the previous year.
2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company collects on its credit sales. A higher ratio suggests a faster collection of receivables.
- Allete Inc's receivables turnover improved steadily from 2020 to 2023, indicating better management of accounts receivable. However, there was a slight decline in 2024 compared to the previous year.
3. Payables Turnover:
- The payables turnover ratio indicates how many times a company pays off its accounts payable during a period. A higher ratio may suggest better payment terms or cash management.
- Allete Inc's payables turnover ratio increased steadily from 2020 to 2023, indicating more frequent payments. However, there was a significant decline in 2024 compared to the previous year.
4. Working Capital Turnover:
- The working capital turnover ratio provides insight into how well a company utilizes its working capital to generate sales revenue. A higher ratio indicates better utilization of working capital.
- Allete Inc's working capital turnover was not available for 2020 and 2021 but showed a substantial increase in 2022, followed by a decrease in 2023 and 2024 which could be due to changes in the company's working capital management strategies.
Overall, Allete Inc's activity ratios reflect fluctuations in its efficiency in managing inventory, receivables, payables, and working capital over the years. It is important for the company to continue monitoring and improving these ratios to ensure optimal operational performance and financial health.
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 | 259.44 | 71.34 | 281.32 | 84.87 | 68.29 |
| Days of sales outstanding (DSO) | days | 41.83 | 31.26 | 38.83 | 38.17 | 41.46 |
| Number of days of payables | days | 190.64 | 41.57 | 63.56 | 96.42 | 101.24 |
Allete Inc's activity ratios provide insights into the efficiency of the company's management of its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The company's DOH has shown fluctuations over the years, with a significant increase from 84.87 days in 2021 to a high of 281.32 days in 2022 before decreasing to 259.44 days in 2024.
- A higher DOH indicates that the company is holding inventory for a longer period before selling it, which may tie up capital and increase holding costs.
2. Days of Sales Outstanding (DSO):
- Allete Inc's DSO has generally been stable, with minor fluctuations observed over the years.
- Lower DSO values, such as the decrease from 38.17 days in 2021 to 31.26 days in 2023, indicate that the company is collecting receivables more efficiently.
3. Number of Days of Payables:
- The number of days of payables shows variability, with a decrease from 101.24 days in 2020 to 41.57 days in 2023 before a significant increase to 190.64 days in 2024.
- A lower number of days of payables suggests that the company is paying its suppliers more quickly, which may reflect strong supplier relationships. On the other hand, a higher number of days may indicate cash flow challenges or negotiation leverage with suppliers.
Overall, a comprehensive analysis of Allete Inc's activity ratios reveals trends in how the company manages its inventory, receivables, and payables over time, providing valuable insights into its operational efficiency and financial performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.30 | 0.37 | 0.31 | 0.28 | 0.24 |
| Total asset turnover | 0.23 | 0.28 | 0.23 | 0.22 | 0.19 |
The fixed asset turnover ratio for Allete Inc has shown a relatively stable increase from 0.24 in 2020 to 0.31 in 2022, before experiencing a slight dip to 0.30 in 2024. This indicates that the company is generating more revenue per dollar invested in fixed assets over the years, with a notable improvement seen between 2020 and 2023.
On the other hand, the total asset turnover ratio for Allete Inc has displayed a similar pattern, increasing from 0.19 in 2020 to 0.28 in 2023, before dropping back to 0.23 in 2024. This ratio suggests that the company is utilizing its total assets more efficiently to generate sales, with a significant improvement observed from 2020 to 2023.
Overall, both the fixed asset turnover and total asset turnover ratios reflect Allete Inc's effectiveness in generating revenue from its assets, with a fluctuation in performance between years. The increasing trends in these ratios suggest improved asset utilization and operational efficiency, although the slight decline in 2024 may warrant further investigation to understand the underlying reasons.