Black Hills Corporation (BKH)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	164.54	820.23	1,062.72	856.79	708.70
Days of sales outstanding (DSO)	days	89.68	57.74	75.21	63.61	61.39
Number of days of payables	days	244.94	950.22	1,588.45	1,235.78	1,106.76
Cash conversion cycle	days	9.29	-72.25	-450.51	-315.37	-336.67

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 164.54 + 89.68 – 244.94
= 9.29

The cash conversion cycle for Black Hills Corporation has shown fluctuations over the years based on the data provided. As of December 31, 2020, the company had a negative cash conversion cycle of -336.67 days, indicating that it was able to convert its investments in inventory and accounts receivable into cash relatively quickly. By December 31, 2021, this cycle further improved to -315.37 days, suggesting efficient management of working capital.

However, there was a significant increase in the cash conversion cycle by December 31, 2022, reaching -450.51 days. This indicates a potential delay in converting investments into cash, which may be attributed to changes in the company's operations or market conditions. The cycle then improved drastically by December 31, 2023, dropping to -72.25 days, which could imply a more efficient cash conversion process during that period.

Finally, as of December 31, 2024, the cash conversion cycle turned positive, standing at 9.29 days. This shift indicates a need for the company to improve its working capital management to shorten the time it takes to convert investments into cash. Overall, the analysis of Black Hills Corporation's cash conversion cycle highlights the importance of monitoring working capital efficiency to ensure optimal cash flow management.