Otter Tail Corporation (OTTR)

Current ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
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
Current ratio		1.84	1.91	0.95	0.54	1.34

December 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $570,170K ÷ $309,757K
= 1.84

The current ratio of Otter Tail Corporation has exhibited fluctuations over the last five years, indicating variations in the company's short-term liquidity position.

In 2023, the current ratio stands at 1.84, showing a slight decrease from the previous year's ratio of 1.91. This suggests that Otter Tail Corporation may have slightly fewer current assets relative to its current liabilities in 2023 compared to 2022. However, the current ratio remains above 1, indicating that the company's current assets are generally sufficient to cover its current liabilities, providing a healthy buffer for short-term obligations.

Looking back at 2021, the current ratio was notably lower at 0.95, which could signal potential liquidity challenges or difficulties in meeting short-term obligations during that period. The significant improvement in the current ratio in 2022 and 2023 indicates that Otter Tail Corporation has since strengthened its liquidity position, potentially through increased current assets or reduced current liabilities.

The sharp increase in the current ratio from 2020 to 2021 may suggest that the company faced liquidity strains or mismanagement of short-term assets and liabilities in 2020, leading to a lower current ratio of 0.54. However, the subsequent recovery and improvement in the current ratio in the following years reflect efforts to enhance liquidity management and strengthen the company's financial position.

Overall, the current ratio trend of Otter Tail Corporation indicates a positive trajectory in managing short-term liquidity risk, with recent years showing a more favorable liquidity position compared to previous periods. Management should continue monitoring and optimizing the current ratio to ensure the company maintains an appropriate level of liquidity to meet its short-term obligations effectively.