Black Hills Corporation (BKH)
Cash conversion cycle
| 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 |
| Cash conversion cycle | days | -72.25 | -450.51 | -315.37 | -336.67 | -433.99 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 820.23 + 57.74 – 950.22
= -72.25
The cash conversion cycle of Black Hills Corporation has shown a fluctuating trend over the past five years. In 2019 and 2020, the company had a relatively short cash conversion cycle of 8.46 days and 12.51 days, respectively, indicating efficient management of cash, accounts receivable, and accounts payable.
However, there was a significant increase in the cash conversion cycle in 2021 to 30.75 days, suggesting a potential slowdown in the company's ability to convert its investments in inventory and receivables into cash. This was further prolonged in 2022 with a cash conversion cycle of 44.78 days.
In 2023, there was a further increase in the cash conversion cycle to 48.27 days, indicating a continued challenge in managing working capital efficiently. A longer cash conversion cycle may signal liquidity constraints and inefficiencies in managing cash flows, which could impact the company's financial health and operational performance.
Overall, Black Hills Corporation should focus on optimizing its cash conversion cycle to ensure effective management of its working capital and maintain a healthy financial position.
Peer comparison
Dec 31, 2023