Allete Inc (ALE)

Short-term

Turnover ratios

Allete, Inc.'s activity ratios show the company's efficiency in managing various aspects of its operations.

1. Inventory Turnover: The inventory turnover ratio indicates how many times a company's inventory is sold and replaced over a period. Allete, Inc. has shown a consistent improvement in this ratio over the past quarters, with values increasing from 1.60 in Q4 2022 to 5.45 in Q4 2023. This suggests that the company is efficiently managing its inventory levels and turning over its stock more quickly.

2. Receivables Turnover: The receivables turnover ratio reflects how quickly a company collects payments from its customers. Allete, Inc. has demonstrated a strong performance in this area, with values consistently above 10 in recent quarters. The trend shows a consistent improvement in collecting receivables promptly, indicating effective credit management practices.

3. Payables Turnover: The payables turnover ratio measures how quickly a company pays its suppliers. Allete, Inc. has displayed varying but generally improving trends in this ratio over the quarters, with values increasing from 5.70 in Q2 2022 to 9.36 in Q4 2023. This suggests that the company is managing its payables more efficiently and possibly negotiating better payment terms with its suppliers.

4. Working Capital Turnover: The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate revenue. Allete, Inc. has shown a significant increase in this ratio, from 95.30 in Q3 2022 to 872.61 in Q4 2022, and further improvement in Q1 and Q2 2023. This indicates that the company is effectively utilizing its working capital to support its operations and drive sales growth.

In conclusion, Allete, Inc.'s activity ratios reflect an overall positive trend in managing its inventory, receivables, payables, and working capital efficiently, which is crucial for maintaining a healthy and sustainable business operation.

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Average number of days

Allete, Inc.'s activity ratios provide insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- There has been a noticeable improvement in inventory management over the quarters, with DOH decreasing from 228.48 days in Q4 2022 to 66.94 days in Q4 2023.
- The company was able to reduce the average number of days it takes to sell its inventory, indicating better control over inventory levels and potentially reduced carrying costs.

2. Days of Sales Outstanding (DSO):
- Allete, Inc. has shown consistency in collecting its accounts receivable efficiently, with DSO ranging from 22.94 days to 32.05 days over the past eight quarters.
- The lower DSO values suggest that the company is able to convert its sales into cash relatively quickly, which is a positive indicator of effective credit management.

3. Number of Days of Payables:
- The number of days of payables has fluctuated over the quarters, ranging from 31.99 days to 71.47 days.
- A lower number of days of payables may indicate that the company is paying its suppliers more promptly, while a higher number may suggest a more extended payment period, potentially improving cash flow management.

Overall, Allete, Inc. has seen improvements in inventory management and efficient accounts receivable collection, although fluctuations in payables indicate variability in the company's payment practices over time. Monitoring these activity ratios can help assess the effectiveness of Allete, Inc.'s working capital management and operational efficiency.

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Long-term

The fixed asset turnover ratio for Allete, Inc. has shown a relatively stable performance over the past eight quarters, fluctuating between 0.29 and 0.38. This ratio measures how efficiently the company is generating revenue from its fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio indicates that the company is utilizing its fixed assets more effectively to generate sales.

On the other hand, the total asset turnover ratio for Allete, Inc. has also demonstrated consistency over the same period, ranging from 0.22 to 0.29. This ratio reflects the company's ability to generate revenue from all its assets, including both fixed and current assets. A higher total asset turnover ratio suggests that the company is efficiently utilizing all its assets to generate sales.

Overall, Allete, Inc.'s long-term activity ratios indicate that the company has been effectively utilizing its assets to generate revenue, with both fixed asset turnover and total asset turnover ratios showing relatively steady performance over the past eight quarters. However, a more detailed analysis of other relevant factors and comparisons with industry benchmarks would provide further insights into the company's overall efficiency in asset utilization.