Black Hills Corporation (BKH)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	164.54	207.38	240.85	347.64	820.23	854.96	697.80	659.60	1,062.72	1,192.72	827.98	598.63	856.79	—	—	—	—	352.01	658.38	589.48
Days of sales outstanding (DSO)	days	89.68	50.77	54.34	81.11	57.74	45.15	49.34	89.47	75.21	54.96	59.62	90.78	63.61	51.21	53.60	79.70	61.39	52.33	54.08	74.81
Number of days of payables	days	244.94	181.89	277.30	352.96	950.22	630.92	681.27	879.17	1,588.45	999.69	1,006.03	957.42	1,235.78	—	—	—	—	423.47	738.86	865.20
Cash conversion cycle	days	9.29	76.26	17.89	75.79	-72.25	269.19	65.87	-130.10	-450.51	247.99	-118.42	-268.01	-315.37	51.21	53.60	79.70	61.39	-19.13	-26.40	-200.91

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 of Black Hills Corporation fluctuated significantly over the periods analyzed. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, as it is taking less time to turn its resources into cash.

In December 2020, the company's cash conversion cycle was 61.39 days, suggesting a moderate efficiency in converting its investments in raw materials and other resources into cash. However, by March 2021, the cycle increased to 79.70 days, indicating a slight delay in the cash conversion process.

The trend reversed drastically by December 2021, with a cash conversion cycle of -315.37 days, implying that the company was operating with negative working capital, potentially having excess cash on hand. This continued with further negative cycles in subsequent periods, indicating a consistent excess of cash available.

The efficiency improved by September 2022, with a cash conversion cycle of 247.99 days, suggesting the company was efficiently managing its working capital and converting its resources into cash. However, by December 2022, the cycle became significantly negative at -450.51 days, indicating an extreme excess of cash.

The cash conversion cycle improved in subsequent periods, returning to positive figures, indicating a more normal operational cycle. By September 2024, the cycle increased to 76.26 days, demonstrating a longer time to convert investments into cash compared to earlier periods but still within reasonable limits.

Overall, Black Hills Corporation experienced fluctuations in its cash conversion cycle, at times indicating significant efficiency in working capital management and at other times demonstrating large cash surpluses. Monitoring and evaluating this cycle are essential for understanding and improving the company's operational and financial performance.