Otter Tail Corporation (OTTR)

Fixed asset turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	1,353,480	1,469,480	1,197,640	883,171	919,503
Property, plant and equipment	US$ in thousands	2,418,380	2,212,720	2,124,600	2,049,270	1,753,790
Fixed asset turnover		0.56	0.66	0.56	0.43	0.52

December 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,353,480K ÷ $2,418,380K
= 0.56

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. A higher fixed asset turnover indicates better utilization of fixed assets to generate sales.

Analyzing Otter Tail Corporation's fixed asset turnover over the last five years, we observe fluctuations in the ratio. In 2023, the fixed asset turnover ratio decreased to 0.56 from 0.66 in 2022, suggesting a decline in the company's efficiency in generating sales from its fixed assets. Despite the decrease, the ratio still indicates that Otter Tail Corporation is generating $0.56 in sales for every dollar invested in fixed assets.

Comparing the 2023 ratio to previous years, we see that it is consistent with the ratio seen in 2021 but is higher than that of 2020 and 2019. This indicates that, overall, Otter Tail Corporation has improved its efficiency in utilizing fixed assets since 2020.

It is important for the company to further analyze the reasons behind the fluctuations in the fixed asset turnover ratio to identify areas for improvement in its asset utilization efficiency. Additionally, management should assess whether the changes in the ratio are in line with industry trends and competitors to ensure the company remains competitive in the market.