Black Hills Corporation (BKH)

Black Hills Corporation's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has varied between 0.58 to 0.90. In 2023, the current ratio was 0.70, indicating that the company had $0.70 in current assets for every $1 of current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Black Hills Corporation's quick ratio has ranged from 0.43 to 0.72 over the same period. In 2023, the quick ratio was 0.56, suggesting that the company had $0.56 in highly liquid assets to cover immediate liabilities.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, has also fluctuated for Black Hills Corporation. In 2023, the cash ratio was 0.25, indicating the company had $0.25 in cash and cash equivalents for every $1 of current liabilities.

Overall, Black Hills Corporation's liquidity ratios demonstrate varying levels of liquidity over the past five years, with the company exhibiting improved liquidity in certain years compared to others. It is essential for stakeholders to closely monitor these ratios to assess the company's ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Black Hills Corporation has exhibited an increasing trend over the past five years. In 2023, the cash conversion cycle stood at 48.27 days, indicating that the company takes approximately 48.27 days to convert its investments in inventory and other resources into cash from sales. This represents a notable increase from the 2022 figure of 44.78 days and a significant rise compared to the 2021 and 2020 values of 30.75 days and 12.51 days, respectively.

The upward trend in the cash conversion cycle suggests that Black Hills Corporation may be facing challenges in efficiently managing its working capital and converting its resources into cash. The longer cash conversion cycle could indicate potential liquidity issues, inefficiencies in inventory management, or slower collection of accounts receivable.

It is important for Black Hills Corporation to closely monitor and potentially improve its cash conversion cycle to ensure optimal working capital management and liquidity. Addressing factors contributing to the extended cash conversion cycle can help the company enhance its financial performance and operational efficiency.