Black Hills Corporation (BKH)

Short-term

Turnover ratios

The activity ratios of Black Hills Corporation provide insights into how efficiently the company is managing its inventory, receivables, and payables.

1. Inventory Turnover:
- The inventory turnover for Black Hills Corporation has shown a downward trend over the years, decreasing from 0.52 in 2020 to 0.34 in 2022 before experiencing a significant increase to 2.22 in 2024. This suggests that the company has improved its inventory management significantly in 2024, possibly by selling its inventory more efficiently.

2. Receivables Turnover:
- The receivables turnover has fluctuated over the years, ranging from 4.07 in 2024 to 6.32 in 2023. A higher receivables turnover ratio indicates that the company is collecting its accounts receivable more quickly. The decrease in 2024 may suggest a slowdown in collecting receivables compared to the previous year.

3. Payables Turnover:
- The payables turnover ratio has shown an increase over the years, from 0.33 in 2020 to 1.49 in 2024. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, which can sometimes indicate liquidity issues. However, it could also mean improved negotiation terms with suppliers.

4. Working Capital Turnover:
- The absence of data for working capital turnover implies that we cannot analyze how effectively the company is utilizing its working capital to generate sales revenue. Ideally, a higher working capital turnover ratio would indicate efficient use of working capital.

In conclusion, Black Hills Corporation has demonstrated improvements in its inventory management efficiency and payables turnover over the years. However, the fluctuations in receivables turnover may require closer monitoring to ensure timely collection of accounts receivable. Further analysis of the working capital turnover ratio would provide a more holistic understanding of the company's operational efficiency.

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Average number of days

The activity ratios of Black Hills Corporation provide insights into the efficiency of its operations.

1. Days of Inventory on Hand (DOH):
- The DOH measures how long it takes for the company to sell its inventory.
- The trend shows a significant increase from 708.70 days in 2020 to 1,062.72 days in 2022, indicating a slower inventory turnover.
- However, there was a notable decrease to 164.54 days in 2024, suggesting a more efficient management of inventory in that year.

2. Days of Sales Outstanding (DSO):
- DSO indicates the average number of days it takes for the company to collect payments from its customers.
- The trend fluctuates, with a decrease from 63.61 days in 2021 to 57.74 days in 2023, implying faster collection of receivables in those years.
- The increase to 89.68 days in 2024 might suggest potential issues with credit and collection policies during that period.

3. Number of Days of Payables:
- This ratio measures the average number of days it takes for the company to pay its suppliers.
- The trend shows an increase in days of payables from 1,106.76 days in 2020 to 1,588.45 days in 2022, indicating a longer period before payments were made.
- However, there was a substantial decrease to 244.94 days in 2024, suggesting a more prompt payment to suppliers during that year.

Overall, the analysis of the activity ratios for Black Hills Corporation reveals fluctuations in efficiency over the years, with improvements in inventory and payables management in 2024, but potential challenges in receivables collection during the same period.

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Long-term

Based on the provided data, Black Hills Corporation's long-term activity ratios reflect the efficiency of the company in generating sales in relation to its assets.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio indicates how well the company is utilizing its fixed assets to generate revenue.
- From 2020 to 2024, Black Hills Corporation's fixed asset turnover ratio ranged from 0.28 to 0.38.
- The trend shows some variability, with the ratio peaking in 2022 at 0.38 before declining in subsequent years.
- A higher fixed asset turnover ratio generally indicates better efficiency in utilizing fixed assets to generate sales.

2. Total Asset Turnover:
- The total asset turnover ratio measures the efficiency of the company in generating sales from all its assets.
- Black Hills Corporation's total asset turnover ratio remained relatively stable, ranging from 0.21 to 0.27 over the five-year period.
- The ratio peaked in 2022 at 0.27, indicating a higher efficiency in generating sales from total assets.
- A stable total asset turnover ratio suggests consistent performance in utilizing both fixed and current assets to generate revenue.

In conclusion, despite some fluctuations in the fixed asset turnover ratio, Black Hills Corporation maintained a generally stable total asset turnover ratio over the five-year period. This suggests that the company effectively utilized its assets to generate sales, with potential areas for improvement in optimizing fixed asset utilization for revenue generation.