Black Hills Corporation (BKH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.44 | 0.34 | 0.43 | 0.52 | 0.48 |
| Receivables turnover | 6.32 | 4.85 | 5.74 | 5.95 | 6.37 |
| Payables turnover | 0.38 | 0.23 | 0.30 | 0.33 | 0.29 |
| Working capital turnover | — | — | — | — | — |
The activity ratios for Black Hills Corporation provide insights into the efficiency and effectiveness of the company's asset management and operational performance over the years.
1. Inventory turnover:
- The inventory turnover ratio has shown a generally increasing trend, indicating that Black Hills Corporation has been able to sell its inventory more rapidly in recent years. This suggests improved inventory management efficiency and better control over inventory levels.
2. Receivables turnover:
- The receivables turnover ratio has fluctuated over the years but has generally remained at healthy levels. A higher ratio indicates that the company is collecting its accounts receivables more quickly. The variations in the ratio may be influenced by changes in the company's credit policies or customer payment behavior.
3. Payables turnover:
- The payables turnover ratio has also shown an uptrend, reflecting that the company is taking longer to pay its suppliers, which could indicate improved liquidity or negotiation power with suppliers. A higher payables turnover ratio may suggest better cash flow management.
4. Working capital turnover:
- The data for working capital turnover is not provided in the table, which makes it challenging to analyze how effectively the company is utilizing its working capital to generate sales. A higher working capital turnover ratio would indicate that the company is efficiently using its working capital to generate revenue.
In conclusion, the activity ratios of Black Hills Corporation suggest improvements in inventory turnover and payables turnover, while the receivables turnover has shown some fluctuations. Monitoring these ratios can help identify areas of strength and areas needing attention in the company's operations and financial management.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 820.23 | 1,062.72 | 856.79 | 708.70 | 753.92 |
| Days of sales outstanding (DSO) | days | 57.74 | 75.21 | 63.61 | 61.39 | 57.28 |
| Number of days of payables | days | 950.22 | 1,588.45 | 1,235.78 | 1,106.76 | 1,245.19 |
The activity ratios of Black Hills Corporation show the efficiency of the company in managing its inventory, receivables, and payables over the years.
1. Days of Inventory on Hand (DOH):
- The DOH has been fluctuating over the past five years, ranging from a low of 59.75 days in 2023 to a high of 87.02 days in 2020. This ratio measures how many days, on average, the company holds its inventory before it is sold. The decreasing trend from 2020 to 2023 indicates that the company has been managing its inventory more efficiently and reducing the holding period.
2. Days of Sales Outstanding (DSO):
- The DSO also shows variability, with the number of days it takes to collect revenue from sales ranging from 57.28 days in 2019 to 75.21 days in 2022. A lower DSO is generally preferable as it indicates faster collection of receivables. The decrease from 2022 to 2023 suggests an improvement in the company's credit and collection procedures.
3. Number of Days of Payables:
- The days of payables reflect the average number of days the company takes to pay its suppliers. The ratio has been decreasing over the years, from 135.9 days in 2020 to 69.22 days in 2023. A lower number of days of payables indicates a quicker settlement of debts to suppliers. The declining trend may signify improved cash management or negotiation with suppliers for better terms.
Overall, the trends in these activity ratios demonstrate Black Hills Corporation's efforts to enhance operational efficiency by effectively managing its inventory, receivables, and payables in recent years.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.33 | 0.38 | 0.30 | 0.28 | 0.32 |
| Total asset turnover | 0.24 | 0.27 | 0.21 | 0.21 | 0.23 |
Black Hills Corporation's long-term activity ratios, specifically fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate revenue.
Fixed asset turnover has shown a decreasing trend over the past five years, declining from 0.32 in 2019 to 0.33 in 2023. This ratio indicates that for every dollar invested in fixed assets, the company is generating $0.33 of revenue in 2023, down from $0.32 in 2019. The decreasing trend could imply that the company's fixed assets are not being utilized as effectively in generating sales over the years.
In contrast, the total asset turnover ratio has also exhibited a decreasing trend, decreasing from 0.23 in 2019 to 0.24 in 2023. This decline suggests that for every dollar of total assets, the company is generating $0.24 of revenue in 2023, compared to $0.23 in 2019. The decreasing total asset turnover could indicate that the company's overall asset efficiency in generating sales has weakened over time.
Overall, both fixed asset turnover and total asset turnover ratios for Black Hills Corporation have been on a declining trajectory in the past five years. This trend may raise concerns about the company's asset utilization efficiency and its ability to generate revenue from its asset base. The company may need to evaluate its asset management strategies and operational efficiency to improve its long-term activity ratios.