Apache Corp. (NYSE:APA)

The financial data for the period ending from 2011 to 2015 reveals several notable trends in operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio generally shows a declining trend, starting at 4.43 in 2011 and decreasing to 3.62 in 2015, with minor fluctuations during the period. This decline suggests a slower movement of inventory over time.

Receivables Turnover

The receivables turnover ratio remained relatively stable around 5.4 to 5.5 from 2011 to 2013, peaked at 6.79 in 2014, indicating improved collection efficiency, and then dropped significantly to 5.09 in 2015, implying a slower collection after the peak.

Payables Turnover

The payables turnover ratio fluctuated over the period, rising from 2.77 in 2011 to 3.00 in 2012, then dropping sharply to 2.07 in 2013. It recovered slightly to 2.27 in 2014 and rose again to 3.34 in 2015, reflecting variability in the payment pace to creditors.

Working Capital Turnover

Available data for working capital turnover starts from 2013. It shows a high ratio of 9.85 in 2013, which sharply declined to 5 in 2014 and further to 3.34 in 2015, indicating reduced efficiency in utilizing working capital to generate sales over these years.

Average Inventory Processing Period

The average inventory processing period increased from 82 days in 2011 to 101 days in 2012, followed by a slight decline and stabilization around the mid-90s in subsequent years. The 101 days in both 2012 and 2015 suggest periods of slower inventory turnover.

Average Receivable Collection Period

The collection period was fairly consistent at 66-67 days between 2011 and 2013, improved to 54 days in 2014 indicating faster collections, but then increased markedly to 72 days in 2015, pointing to potential delays in receivables.

Operating Cycle

The operating cycle fluctuated moderately, increasing from 149 days in 2011 to 167 days in 2012, followed by a slight reduction in 2013 and 2014, and then increasing again to 173 days in 2015. The longer operating cycle in 2015 suggests greater time is being taken to convert inventory and receivables into cash.

Average Payables Payment Period

This period decreased from 132 days in 2011 to 109 days in 2015, with a peak at 176 days in 2013. The decline towards 2015 indicates a tendency to pay suppliers more quickly compared to earlier years.

Cash Conversion Cycle

The cash conversion cycle exhibited considerable volatility, starting at 17 days in 2011, rising to 45 days in 2012, then turning negative in 2013 and 2014 (-13 and -12 days respectively), which could indicate improved liquidity and supplier financing. However, in 2015, it surged again to 64 days, implying a significant extension in the time needed to convert resources into cash.

Overall, the data suggests that while some efficiency gains were observable around 2013-2014—particularly in improved receivables turnover and a negative cash conversion cycle—these gains were not sustained into 2015. The year 2015 shows slower inventory turnover, longer receivables collection periods, a prolonged operating cycle, and an extended cash conversion cycle, which collectively indicate increasing challenges in managing working capital effectively.

Cost of Revenues

The cost of revenues shows a fluctuating trend over the five-year period. It increased from 2,901 million US dollars in 2011 to a peak of 3,353 million US dollars in 2013, followed by a notable decline to 2,752 million in 2014 and a further drop to 2,065 million in 2015. This pattern indicates initial growth in cost-related activities, succeeded by a significant reduction in the last two years.

Inventories

Inventory levels rose substantially from 655 million US dollars in 2011 to a high of 908 million in 2012, then slightly decreased to 891 million in 2013. Subsequently, inventories declined steadily to 708 million in 2014 and further to 570 million in 2015. This downward trend in inventory after 2012 suggests efforts to reduce stock levels or changes in inventory management practice.

Inventory Turnover Ratio

The inventory turnover ratio decreased from 4.43 in 2011 to 3.6 in 2012, reflecting slower inventory movement. It then increased modestly to 3.76 and 3.89 in 2013 and 2014, respectively, indicating improved efficiency in converting inventory to sales. However, in 2015, the ratio fell again to 3.62, implying a slight reduction in inventory turnover speed. Overall, the ratio fluctuated with no consistent upward or downward trend.

Summary of Trends

The data reveals an initial increase and subsequent decline in both cost of revenues and inventory levels, suggesting changes in operational scale or cost control measures over the period. Despite these changes, inventory turnover exhibited variability without a clear trend, pointing to fluctuating inventory management effectiveness. The declining inventory and cost of revenues from 2013 onward may reflect strategic adjustments aimed at optimizing resources or responding to market conditions.

Oil and Gas Production Revenues

The oil and gas production revenues displayed a declining trend over the five-year period. Starting at US$16,810 million at the end of 2011, revenues slightly increased to US$16,947 million in 2012. However, from 2013 onwards, revenues progressively decreased to US$16,402 million in 2013, dropping further to US$13,749 million in 2014, and sharply declining to US$6,383 million by the end of 2015. This represents a significant reduction in revenue, particularly notable in the final two years.

Receivables, Net of Allowance

The net receivables also exhibited a downward trend in the same timeframe. Starting at US$3,079 million in 2011, the figure remained relatively stable through 2012 at US$3,086 million, then decreased to US$2,952 million in 2013. In 2014, a more pronounced decline occurred, with receivables dropping to US$2,024 million, followed by a further decline to US$1,253 million in 2015. The overall decrease suggests tighter credit management or reduced sales on credit matching the revenue decline.

Receivables Turnover Ratio

The receivables turnover ratio showed some fluctuation during the period. It remained relatively stable between 2011 and 2013, moving slightly from 5.46 to 5.56. Notably, in 2014, the ratio increased significantly to 6.79, indicating faster collection of receivables or improved efficiency in accounts receivable management. However, in 2015, the ratio declined to 5.09, which may suggest a slowdown in collections or more receivables outstanding relative to sales during that year.

Cost of revenues

The cost of revenues initially increased from 2901 million US dollars in 2011 to a peak of 3353 million US dollars in 2013. After 2013, there was a notable decline, with the cost dropping to 2752 million in 2014 and continuing downward to 2065 million in 2015. This trend indicates a reduction in direct costs associated with revenues starting from 2014 onward.

Accounts payable

Accounts payable increased markedly from 1048 million US dollars in 2011 to a high of 1616 million in 2013. Following this peak, accounts payable decreased substantially, reaching 1210 million in 2014 and dropping further to 618 million by the end of 2015. The decline suggests a possible shift in payment practices or improved management of payables during the latter periods.

Payables turnover ratio

The payables turnover ratio rose from 2.77 in 2011 to 3.0 in 2012, reflecting a faster rate of paying suppliers. However, in 2013, the turnover slowed down sharply to 2.07, indicating longer payment periods. There was a moderate recovery in 2014 to 2.27, followed by a significant increase to 3.34 in 2015, suggesting a return to quicker payments to suppliers and potentially improved liquidity or payment efficiency.

Working Capital

Working capital exhibited considerable volatility over the examined period. It started with a negative value of -160 million USD in 2011, deeply declining further to -574 million USD in 2012. Subsequently, there was a significant reversal, with working capital rising sharply to 1,666 million USD in 2013 and peaking at 2,751 million USD in 2014 before declining to 1,911 million USD in 2015. This indicates an initial liquidity challenge that was substantially addressed in 2013 and 2014, albeit with a reduction in 2015 from its highest point.

Oil and Gas Production Revenues

The revenue stream from oil and gas production showed a declining trend throughout the five-year period. Revenues started at 16,810 million USD in 2011 and experienced a minor increase to 16,947 million USD in 2012, followed by a gradual decrease each subsequent year: 16,402 million in 2013, 13,749 million in 2014, and a steep fall to 6,383 million USD in 2015. This consistent revenue decline highlights potential challenges in production levels, pricing, or both.

Working Capital Turnover

The working capital turnover ratio, available for the last three years, showed a consistent decrease from 9.85 in 2013 to 5 in 2014, further declining to 3.34 in 2015. This trend suggests a reduced efficiency in utilizing working capital to generate revenue as years progressed, aligning with the decrease in revenues and the fluctuations observed in working capital.

Inventory Turnover

The inventory turnover ratio shows a declining trend from 2011 to 2015. Starting at 4.43 in 2011, the ratio decreases to 3.6 in 2012, followed by a slight recovery up to 3.89 in 2014, before dropping again to 3.62 in 2015. This pattern indicates a reduction in the frequency of inventory being sold and replaced over the years, suggesting slower inventory movement overall.

Average Inventory Processing Period

The average inventory processing period demonstrates an increasing trend over the same timeline. It rises from 82 days in 2011 to 101 days in 2012, slightly declines to 97 days in 2013, then further decreases to 94 days in 2014 before returning to 101 days in 2015. This indicates that the company is taking more time on average to process its inventory, consistent with the declining inventory turnover ratio.

Overall Analysis

The inverse relationship between inventory turnover and average inventory processing period is evident, with turnover ratios decreasing as processing days increase. This suggests a trend of slower inventory movement and potentially increased holding periods for stock. Such patterns could imply issues with inventory management efficiency or changes in sales dynamics over time.

Receivables Turnover

The receivables turnover ratio shows a generally stable trend from 2011 to 2013, with values of 5.46, 5.49, and 5.56 respectively. In 2014, there is a notable increase to 6.79, indicating improved efficiency in collecting receivables during that period. However, in 2015, the ratio declines significantly to 5.09, suggesting a reduction in collection speed or efficiency compared to the previous year.

Average Receivable Collection Period

The average receivable collection period remains fairly constant at 66-67 days during 2011 to 2013, reflecting steady collection performance. In 2014, there is a considerable improvement as the collection period shortens to 54 days, indicating faster receipt of receivables. This positive trend reverses in 2015, when the period lengthens significantly to 72 days, suggesting delayed collections and reduced efficiency in managing receivables.

Overall Insights

The data reveals a consistent receivables management performance from 2011 through 2013, followed by a marked improvement in 2014, as indicated by higher turnover and shorter collection period. However, these gains were not sustained in 2015, when both metrics worsened, signaling challenges in maintaining collection efficiency. This fluctuation suggests the company may need to investigate factors influencing receivables management to ensure consistent cash flow from customers.

Average inventory processing period

The average inventory processing period exhibited fluctuations over the five-year period. It started at 82 days in 2011, increased sharply to 101 days in 2012, slightly decreased to 97 days in 2013, then further declined to 94 days in 2014 before rising again to 101 days in 2015. This indicates variability in inventory turnover speed, with 2012 and 2015 reflecting slower inventory processing compared to other years.

Average receivable collection period

The average receivable collection period remained relatively stable initially, holding steady at 67 days in 2011 and 66 days in both 2012 and 2013. In 2014, there was a noticeable improvement as the collection period shortened to 54 days, suggesting more efficient receivables management. However, this trend reversed in 2015, when the period increased significantly to 72 days, indicating slower collection of receivables.

Operating cycle

The operating cycle displayed a general upward trend across the period evaluated. Starting at 149 days in 2011, it increased to 167 days in 2012, then slightly decreased to 163 days in 2013, followed by a reduction to 148 days in 2014. Despite this dip, the cycle lengthened notably to 173 days in 2015, marking the longest duration within the timeframe. This overall increase suggests an extension in the total time taken to convert inventory and receivables into cash, with potential implications for working capital efficiency.

Payables Turnover

The payables turnover ratio exhibited fluctuations over the five-year period. Initially, it increased from 2.77 in 2011 to 3.00 in 2012, indicating a faster rate of paying off suppliers. However, it then declined to 2.07 in 2013 and slightly recovered to 2.27 in 2014 before rising significantly to 3.34 in 2015. This pattern suggests some variability in payment practices but ultimately a stronger payables management in 2015 compared to the earlier years.

Average Payables Payment Period

The average payment period showed an inverse trend relative to the payables turnover ratio, as expected. It decreased from 132 days in 2011 to 122 days in 2012, reflecting quicker payments to suppliers. Then, there was a marked increase to 176 days in 2013 and a slight reduction to 160 days in 2014. Finally, a notable decrease occurred in 2015 to 109 days, indicating that the company accelerated its payments substantially that year. The general movement points to a shift between longer payment terms or possibly supplier negotiation in 2013-2014, followed by a tightening in 2015.

Average inventory processing period

The average inventory processing period exhibits fluctuation over the analyzed years. Starting at 82 days in 2011, it increases to 101 days by 2012, followed by a slight decrease to 97 days in 2013 and 94 days in 2014. However, it rises again to 101 days in 2015, indicating variability in how long inventory is held before processing.

Average receivable collection period

The receivable collection period remains relatively stable from 2011 through 2013, hovering around 66-67 days. A notable decrease occurs in 2014, dropping to 54 days, suggesting an improvement in collection efficiency. However, this trend reverses in 2015 with an increase to 72 days, indicating a longer duration to collect receivables compared to previous years.

Average payables payment period

The payables payment period shows considerable variability. It decreases from 132 days in 2011 to 122 days in 2012, then sharply increases to 176 days in 2013. Following this peak, there is a gradual decrease to 160 days in 2014 and a more significant decline to 109 days in 2015, reflecting changes in payment policies or supplier negotiations.

Cash conversion cycle

The cash conversion cycle displays significant fluctuations, starting at 17 days in 2011 and rising to 45 days in 2012. It then turns negative in 2013 (-13 days) and remains slightly negative in 2014 (-12 days), which may indicate efficient management of working capital during these years. However, in 2015, there is a substantial increase to 64 days, signifying a longer time to convert resources into cash flow and suggesting potential challenges in operational efficiency.