Allete Inc (ALE)

Fixed asset turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	1,879,800	1,570,700	1,419,200	1,169,100	1,240,500
Property, plant and equipment	US$ in thousands	5,013,400	5,004,000	5,087,500	4,840,800	4,377,000
Fixed asset turnover		0.37	0.31	0.28	0.24	0.28

December 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,879,800K ÷ $5,013,400K
= 0.37

Fixed asset turnover is a financial ratio that measures a company's ability to generate sales revenue from its investment in fixed assets. The trend for Allete, Inc.'s fixed asset turnover over the past five years shows a fluctuating pattern.

In 2023, the fixed asset turnover was 0.37, indicating that the company generated $0.37 in sales for every $1 invested in fixed assets. This represents an improvement from the previous year, where the ratio was 0.31. The increase suggests that Allete, Inc. became more efficient in utilizing its fixed assets to generate revenue.

Looking further back, in 2021 and 2020, the fixed asset turnover was 0.28 and 0.24, respectively, showing a gradual improvement in asset utilization efficiency. However, in 2019, the ratio was 0.28, similar to 2021, indicating a temporary decrease in efficiency compared to the surrounding years.

Overall, the increasing trend in fixed asset turnover for Allete, Inc. suggests that the company has been effectively managing its fixed assets to generate sales revenue. This improvement could be attributed to better asset utilization, operational efficiency, or effective capital expenditure decisions. However, ongoing monitoring is crucial to ensure this trend continues and remains sustainable.