Allete Inc (ALE)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	263.81	107.17	121.51	94.34	71.61	71.77	76.64	162.08	283.34	370.65	295.89	172.54	85.87	81.56	80.61	68.22	69.32	198.13	219.59	213.28
Days of sales outstanding (DSO)	days	41.83	31.85	31.54	30.21	31.26	22.94	23.51	25.06	38.83	28.49	28.26	29.53	38.17	30.00	29.79	34.62	41.46	29.12	27.29	30.36
Number of days of payables	days	193.85	71.28	62.04	43.48	41.73	44.70	35.23	39.67	64.01	97.57	112.10	66.61	97.56	92.75	91.50	98.65	102.76	209.25	230.57	443.83
Cash conversion cycle	days	111.79	67.75	91.01	81.07	61.15	50.01	64.93	147.48	258.15	301.57	212.05	135.46	26.48	18.81	18.90	4.19	8.02	17.99	16.31	-200.19

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 263.81 + 41.83 – 193.85
= 111.79

The cash conversion cycle for Allete Inc has shown fluctuations over the reported periods. The company managed its cash conversion more effectively in the first quarter of 2023 with a cycle of 4.19 days, which indicates a quicker conversion of inventory into cash during that period. However, this efficiency was not sustained, as the cash conversion cycle increased significantly in subsequent quarters, reaching a peak of 301.57 days at the end of September 2022.

The prolonged cash conversion cycle in the latter part of 2022 and early 2023 may suggest delays in collecting receivables or managing inventory levels more efficiently. Although the cycle reduced moderately in the following periods, it remained higher than the more optimal levels seen earlier.

In the most recent periods, there was a moderate improvement in the cash conversion cycle, trending downwards towards a more reasonable range. However, the cycle remains somewhat volatile, indicating potential challenges in efficiently managing working capital components.

Overall, Allete Inc should focus on streamlining its processes to reduce the cash conversion cycle, ensuring smoother operations and improved liquidity management in the long term.