Black Hills Corporation (BKH)

The current ratio of Black Hills Corporation has shown some fluctuations over the past few years, ranging from a low of 0.46 to a high of 1.12. The current ratio measures the company's ability to cover its short-term obligations with its current assets. Generally, a current ratio above 1 indicates the company's ability to meet its current liabilities. Black Hills Corporation's current ratio has been below 1 for most quarters, indicating potential liquidity issues.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also fluctuated over the years, ranging from 0.20 to 0.85. A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on the sale of inventory. Black Hills Corporation's quick ratio has been below 1 for the majority of the periods, indicating a potential strain on liquidity.

Lastly, the cash ratio, which focuses solely on the most liquid assets (cash and cash equivalents) to cover current liabilities, varied significantly from 0.00 to 0.56. A higher cash ratio is typically preferred as it indicates a greater ability to cover short-term liabilities without relying on other current assets. Black Hills Corporation's cash ratio has shown some improvement over the years but remains relatively low for some periods, which may signal a need to enhance its cash position for better liquidity management.

In summary, Black Hills Corporation's liquidity ratios, including the current ratio, quick ratio, and cash ratio, indicate a mixed picture of the company's ability to meet its short-term obligations. Continuous monitoring and potential adjustments to improve liquidity management may be necessary to ensure financial stability and meet ongoing operational needs.

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Additional liquidity measure

The cash conversion cycle for Black Hills Corporation has shown significant fluctuations over the analyzed periods. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, generating cash from its operations before paying suppliers.

From March 31, 2020, to December 31, 2020, Black Hills Corporation shifted from a negative cycle (indicating efficiency) to a positive cycle of 61.39 days, which suggests a slowdown in its cash conversion process. This trend continued into the first quarter of 2021, with a further increase to 79.70 days. The company managed to reduce this cycle by June 30, 2021, to 53.60 days and maintained a similar level until September 30, 2021.

However, there was a significant improvement in the cash conversion cycle by December 31, 2021, when it dropped to -315.37 days, indicating a speedier turnaround of cash. This improved efficiency was sustained in the subsequent quarters until June 30, 2022, showing a negative cash conversion cycle which continued to increase efficiency.

From September 30, 2022, to December 31, 2024, the cash conversion cycle went through several fluctuations. It reached its peak efficiency by September 30, 2022, at 247.99 days and then dropped sharply to -450.51 days by December 31, 2022, suggesting a considerable improvement in working capital management.

The cycle continued to fluctuate with positive and negative trends until the end of the analysis period on December 31, 2024. Overall, the cash conversion cycle of Black Hills Corporation displayed periods of both efficiency and inefficiency in managing its working capital during the analyzed timeframe.