Marathon Oil Corp. (MRO) | Short-term (Operating) Activity

Ratios (Summary)

Marathon Oil Corp., short-term (operating) activity ratios

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Turnover Ratios
Inventory turnover	40.62	20.94	14.76	22.01	19.70
Receivables turnover	7.65	12.11	11.43	24.95	11.10
Payables turnover	7.87	9.04	7.66	16.38	8.53
Working capital turnover	–	26.63	33.84	118.76	–
Average No. of Days
Average inventory processing period	9	17	25	17	19
Add: Average receivable collection period	48	30	32	15	33
Operating cycle	57	48	57	31	51
Less: Average payables payment period	46	40	48	22	43
Cash conversion cycle	10	7	9	9	9

Source: Based on data from Marathon Oil Corp. Annual Reports

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Marathon Oil Corp.'s inventory turnover improved from 2009 to 2010 and from 2010 to 2011.
Receivables turnover	An activity ratio equal to revenue divided by receivables.	Marathon Oil Corp.'s receivables turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Payables turnover	An activity ratio calculated as revenue divided by payables.	Marathon Oil Corp.'s payables turnover increased from 2009 to 2010 but then slightly declined from 2010 to 2011 not reaching 2009 level.
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Marathon Oil Corp.'s working capital turnover deteriorated from 2009 to 2010 and from 2010 to 2011.
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Marathon Oil Corp.'s average inventory processing period improved from 2009 to 2010 and from 2010 to 2011.
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.	Marathon Oil Corp.'s average receivable collection period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Operating cycle	Equal to average inventory processing period plus average receivables collection period.	Marathon Oil Corp.'s operating cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Marathon Oil Corp.'s average payables payment period declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.	Marathon Oil Corp.'s cash conversion cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

Inventory Turnover

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data (USD $ in millions)
Revenue	14,663	72,321	53,470	77,193	64,552
Inventories	361	3,453	3,622	3,507	3,277
Inventory Turnover, Comparison to Industry
Marathon Oil Corp.¹	40.62	20.94	14.76	22.01	19.70
Industry, Oil & Gas	16.58	14.87	13.19	23.54	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Inventory turnover = Revenue ÷ Inventories
= 14,663 ÷ 361 = 40.62

Ratio	Description	The company
Inventory turnover	An activity ratio calculated as revenue divided by inventory.	Marathon Oil Corp.'s inventory turnover improved from 2009 to 2010 and from 2010 to 2011.

Receivables Turnover

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data (USD $ in millions)
Revenue	14,663	72,321	53,470	77,193	64,552
Receivables, less allowance for doubtful accounts	1,917	5,972	4,677	3,094	5,818
Receivables Turnover, Comparison to Industry
Marathon Oil Corp.¹	7.65	12.11	11.43	24.95	11.10
Industry, Oil & Gas	11.30	10.36	9.78	14.87	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Receivables turnover = Revenue ÷ Receivables, less allowance for doubtful accounts
= 14,663 ÷ 1,917 = 7.65

Ratio	Description	The company
Receivables turnover	An activity ratio equal to revenue divided by receivables.	Marathon Oil Corp.'s receivables turnover improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

Payables Turnover

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data (USD $ in millions)
Revenue	14,663	72,321	53,470	77,193	64,552
Accounts payable	1,864	8,000	6,982	4,712	7,567
Payables Turnover, Comparison to Industry
Marathon Oil Corp.¹	7.87	9.04	7.66	16.38	8.53
Industry, Oil & Gas	11.61	10.69	10.39	16.45	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Payables turnover = Revenue ÷ Accounts payable
= 14,663 ÷ 1,864 = 7.87

Ratio	Description	The company
Payables turnover	An activity ratio calculated as revenue divided by payables.	Marathon Oil Corp.'s payables turnover increased from 2009 to 2010 but then slightly declined from 2010 to 2011 not reaching 2009 level.

Working Capital Turnover

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data (USD $ in millions)
Current assets	3,224	13,829	10,637	8,403	10,587
Less: Current liabilities	4,394	11,113	9,057	7,753	11,260
Working capital	(1,170)	2,716	1,580	650	(673)
Revenue	14,663	72,321	53,470	77,193	64,552
Working Capital Turnover, Comparison to Industry
Marathon Oil Corp.¹	–	26.63	33.84	118.76	–
Industry, Oil & Gas	24.43	19.76	22.65	38.48	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Working capital turnover = Revenue ÷ Working capital
= 14,663 ÷ -1,170 = –

Ratio	Description	The company
Working capital turnover	An activity ratio calculated as revenue divided by working capital.	Marathon Oil Corp.'s working capital turnover deteriorated from 2009 to 2010 and from 2010 to 2011.

Average Inventory Processing Period

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data
Inventory turnover	40.62	20.94	14.76	22.01	19.70
Average Inventory Processing Period (no. of days), Comparison to Industry
Marathon Oil Corp.¹	9	17	25	17	19
Industry, Oil & Gas	22	25	28	16	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 40.62 = 9

Ratio	Description	The company
Average inventory processing period	An activity ratio equal to the number of days in the period divided by inventory turnover over the period.	Marathon Oil Corp.'s average inventory processing period improved from 2009 to 2010 and from 2010 to 2011.

Average Receivable Collection Period

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data
Receivables turnover	7.65	12.11	11.43	24.95	11.10
Average Receivable Collection Period (no. of days), Comparison to Industry
Marathon Oil Corp.¹	48	30	32	15	33
Industry, Oil & Gas	32	35	37	25	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 7.65 = 48

Ratio	Description	The company
Average receivable collection period	An activity ratio equal to the number of days in the period divided by receivables turnoverd.	Marathon Oil Corp.'s average receivable collection period improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

Operating Cycle

No. of days

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data
Average inventory processing period	9	17	25	17	19
Average receivable collection period	48	30	32	15	33
Operating Cycle, Comparison to Industry
Marathon Oil Corp.¹	57	48	57	31	51
Industry, Oil & Gas	54	60	65	40	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Operating cycle = Average inventory processing period + Average receivable collection period
= 9 + 48 = 57

Ratio	Description	The company
Operating cycle	Equal to average inventory processing period plus average receivables collection period.	Marathon Oil Corp.'s operating cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.

Average Payables Payment Period

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data
Payables turnover	7.87	9.04	7.66	16.38	8.53
Average Payables Payment Period (no. of days), Comparison to Industry
Marathon Oil Corp.¹	46	40	48	22	43
Industry, Oil & Gas	31	34	35	22	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 7.87 = 46

Ratio	Description	The company
Average payables payment period	An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period.	Marathon Oil Corp.'s average payables payment period declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.

Cash Conversion Cycle

No. of days

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Selected Financial Data
Average inventory processing period	9	17	25	17	19
Average receivable collection period	48	30	32	15	33
Average payables payment period	46	40	48	22	43
Cash Conversion Cycle, Comparison to Industry
Marathon Oil Corp.¹	10	7	9	9	9
Industry, Oil & Gas	23	26	30	18	–

Source: Based on data from Marathon Oil Corp. Annual Reports

2011 Calculations

¹ Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 9 + 48 – 46 = 10

Ratio	Description	The company
Cash conversion cycle	A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.	Marathon Oil Corp.'s cash conversion cycle improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.