Otter Tail Corporation (OTTR)

Working capital 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
Total current assets	US$ in thousands	570,170	452,752	369,354	234,832	254,860
Total current liabilities	US$ in thousands	309,757	237,636	387,699	436,786	189,741
Working capital turnover		5.20	6.83	—	—	14.12

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,353,480K ÷ ($570,170K – $309,757K)
= 5.20

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales revenue. In the case of Otter Tail Corporation, the working capital turnover has shown some fluctuations over the years.

In 2019, the working capital turnover was at a relatively high level of 14.12, indicating that the company was able to generate $14.12 of revenue for every $1 of working capital invested. This suggests a high level of efficiency in utilizing its working capital resources to drive sales.

However, in subsequent years, the working capital turnover ratio decreased significantly. By 2022, the ratio dropped to 6.79, and further declined to 5.18 in 2023. These lower ratios may indicate that Otter Tail Corporation's efficiency in utilizing working capital to generate revenue has decreased over time.

It is important for the company to closely monitor and improve its working capital management practices to ensure optimal efficiency in utilizing its resources. Further analysis of the company's working capital components and operational efficiency may be necessary to address the declining trend in the working capital turnover ratio.