NorthWestern Corporation (NWE)

Short-term

Turnover ratios

Based on the provided data for NorthWestern Corporation, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio for NorthWestern Corporation declined slightly from 1.10 in June 2024 to 1.08 in September 2024, and then increased to 1.13 by December 2024. This indicates that the company is selling its inventory at a slower pace in the third quarter but improved in the fourth quarter. A higher inventory turnover ratio generally suggests efficient management of inventory levels.

2. Receivables Turnover:
- The receivables turnover ratio for NorthWestern Corporation was 9.85 in June 2024, increased to 10.38 in September 2024, and then decreased significantly to 5.35 in December 2024. This trend indicates that the company was collecting its receivables more frequently in the first two quarters but experienced a slowdown in collections by the end of the year. A higher receivables turnover ratio is preferable as it indicates effective credit management.

3. Payables Turnover:
- The payables turnover ratio for NorthWestern Corporation slightly increased from 1.38 in June 2024 to 1.41 in September 2024, but then decreased to 1.25 by December 2024. This suggests that the company is taking slightly longer to pay its suppliers towards the end of the year compared to earlier quarters. A lower payables turnover ratio could potentially indicate liquidity concerns or changes in payment terms with suppliers.

4. Working Capital Turnover:
- The data shows that information for the working capital turnover ratio is not available for all three quarters, as indicated by "—" for June 30, 2024, September 30, 2024, and December 31, 2024. The working capital turnover ratio is used to assess how well a company utilizes its working capital to generate sales. The absence of data makes it challenging to evaluate this particular aspect of NorthWestern Corporation's operations.

In summary, the analysis of NorthWestern Corporation's activity ratios provides insights into the efficiency of managing inventory, collecting receivables, and paying suppliers. It is important for the company to closely monitor these ratios to ensure optimal utilization of resources and effective working capital management.

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Average number of days

NorthWestern Corporation's activity ratios show varying trends in its operational efficiency over the three quarters of the year 2024.

1. Days of Inventory on Hand (DOH):
- NorthWestern Corporation had a DOH of 332.26 days on June 30, 2024, which increased slightly to 336.53 days by September 30, 2024, before decreasing to 321.96 days by December 31, 2024.
- The decrease in DOH from September to December indicates a potential improvement in managing inventory levels and turnover, which could lead to better utilization of resources.

2. Days of Sales Outstanding (DSO):
- The DSO for NorthWestern Corporation was 37.06 days on June 30, 2024, decreased to 35.17 days by September 30, 2024, before significantly increasing to 68.22 days by December 31, 2024.
- The sharp rise in DSO from September to December suggests that the company may be facing challenges in collecting receivables promptly, which could impact cash flows and liquidity.

3. Number of Days of Payables:
- NorthWestern Corporation had 263.77 days of payables on June 30, 2024, decreased to 259.52 days by September 30, 2024, before increasing to 292.77 days by December 31, 2024.
- The increase in the number of days of payables from September to December may indicate a change in the company's payment policies or supplier relationships, which can impact working capital management.

Overall, NorthWestern Corporation's activity ratios suggest a mixed performance in managing its inventory, sales, and payables throughout the year 2024, with potential areas for improvement in efficiency and cash flow management.

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Long-term

NorthWestern Corporation's long-term activity ratios indicate that the company's efficiency in utilizing its fixed assets and total assets to generate revenue remained consistent throughout the year 2024. The fixed asset turnover ratio remained at 0.24 in each quarter, suggesting that for every dollar invested in fixed assets, the company generated $0.24 in revenue. Similarly, the total asset turnover ratio also stood at 0.19 for all quarters, indicating that the company generated $0.19 in revenue for every dollar of total assets it had. Overall, the stable nature of these ratios suggests that NorthWestern Corporation maintained a steady level of asset utilization efficiency over the course of the year.