Otter Tail Corporation (OTTR)

Short-term

Turnover ratios

The activity ratios of Otter Tail Corporation provide insight into how efficiently the company manages its inventory, receivables, payables, and working capital turnover over the years.

1. Inventory Turnover: Otter Tail Corporation's inventory turnover has shown a significant improvement over the years, rising from 0.06 in 2020 to 3.41 in 2024. This indicates that the company is selling its inventory more frequently, which is a positive sign of efficient inventory management.

2. Receivables Turnover: The receivables turnover ratio has fluctuated over the years, with a peak of 10.06 in 2022 and a low of 6.77 in 2021. However, the overall trend shows that Otter Tail Corporation is collecting its receivables at a reasonable pace, ensuring a steady flow of cash into the business.

3. Payables Turnover: Otter Tail Corporation's payables turnover has been relatively stable, staying within a range of 3.65 to 5.49 over the years. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly, which can lead to better relationships and potential discounts.

4. Working Capital Turnover: The working capital turnover ratio has been on a downward trend, declining from 6.83 in 2022 to 4.15 in 2024. This suggests that Otter Tail Corporation is generating less revenue relative to its working capital, which may require further analysis to understand the underlying reasons.

Overall, the activity ratios of Otter Tail Corporation highlight the company's efforts to efficiently manage its operations, inventory, receivables, and payables. Monitoring these ratios can help stakeholders assess the company's financial health and operational efficiency.

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Average number of days

The activity ratios for Otter Tail Corporation show the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH): This ratio indicates the number of days it takes for the company to sell its inventory. From December 31, 2020, to December 31, 2024, Otter Tail Corporation has significantly decreased its DOH from 6,528.28 days to 107.03 days. This suggests that the company has improved its inventory management efficiency over the years.

2. Days of Sales Outstanding (DSO): DSO reflects how long it takes for the company to collect payment from its customers. Otter Tail Corporation's DSO has fluctuated over the years, decreasing from 48.43 days in 2020 to 40.59 days in 2024. Although there have been fluctuations, the overall trend shows a moderate improvement in the collection of receivables.

3. Number of Days of Payables: This ratio represents the average number of days the company takes to pay its suppliers. Otter Tail Corporation has managed to reduce its payables period consistently from 8,543.68 days in 2020 to 81.64 days in 2024. This implies that the company has been paying its suppliers more efficiently and potentially taking advantage of favorable credit terms.

In conclusion, Otter Tail Corporation has shown improvements in inventory turnover, receivables collection, and payables management over the years, indicating enhanced operational efficiency and cash flow management.

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Long-term

The fixed asset turnover ratio for Otter Tail Corporation has shown an increasing trend over the past five years, indicating that the company is generating more revenue relative to its investment in fixed assets. This suggests improved efficiency in utilizing its long-term assets to generate sales.

On the other hand, the total asset turnover ratio has been somewhat fluctuating, with a peak in 2022 and a decrease in 2024. This indicates that the company's overall asset utilization in generating sales has varied over the years, with a slight decline in 2024.

Overall, the increasing trend in fixed asset turnover coupled with some fluctuations in total asset turnover suggests that Otter Tail Corporation may be effectively managing its fixed assets to generate sales, although there may be room for improvement in the overall efficiency of utilizing its total assets to drive revenue.