Devon Energy Corp. (NYSE:DVN)

Inventory Turnover

The inventory turnover ratio is available only for the most recent four quarters, showing a declining trend. It decreased from 42.67 in Q1 2023 to 31.89 in Q4 2023, suggesting that inventory is being sold more slowly over this period.

Receivables Turnover

Receivables turnover displays fluctuations across the periods with a general pattern of volatility. After peaking at 12.17 in Q2 2020, it declined sharply to 4.13 in Q3 2020, then gradually increased again, reaching 11.88 in Q3 2023 before dipping to 8.32 in Q4 2023. This indicates variability in the speed of collections, with some difficulty in faster receivables turnover during 2020 but improvement afterward.

Payables Turnover

Payables turnover exhibits variability without a clear overall trend. It showed values ranging from about 5.77 in Q2 2021 to a peak of 12.96 in Q4 2020. The ratio tended to decrease moderately near the end of the period, standing near 9.15 in Q4 2023. This suggests some inconsistency in how quickly the company is meeting its payables obligations.

Working Capital Turnover

Working capital turnover is highly volatile with extreme spikes, notably a value of 1631.5 in Q3 2021, which appears likely to be an anomaly or data irregularity. Aside from that outlier, turnover fluctuates widely between values near 2.65 and 74.34. The large variation indicates significant changes in efficiency of working capital utilization over time, without a stable trend.

Average Inventory Processing Period

This period was stable at 9 days for Q1 to Q3 2023, then increased to 11 days by Q4 2023. The slight upward movement corresponds with the observed decrease in inventory turnover, indicating that inventory is held marginally longer before sale.

Average Receivable Collection Period

The receivable collection period shows considerable fluctuation. It varied from a low of 30 days (Q1 2018 and Q2 2020) to a high of 88 days in Q2 2021. After this peak, the period generally decreased to between 31 and 44 days in the most recent quarters. This pattern suggests periods of slower receivable collection but with gradual improvements toward more efficient collection cycles recently.

Operating Cycle

Data limited to recent quarters shows an increase from 40 days in Q2 2023 to 55 days in Q4 2023, indicating a lengthening in the total time from inventory acquisition to cash collection, corresponding with the lengthening inventory processing and receivables collection periods.

Average Payables Payment Period

This period varies considerably, with values ranging from 28 days (Q4 2020) to 63 days (Q2 2021). It stabilized near 40 days for the last several quarters through Q4 2023, denoting a consistent payment behavior in recent periods after prior volatility.

Cash Conversion Cycle

The cash conversion cycle is sparse in data but indicates a modest increase from 2 days in Q2 2023 to 15 days in Q4 2023, suggesting slower liquidity turnover in the most recent quarter.

The cost of revenues demonstrates a fluctuating but generally increasing trend over the observed periods. From early 2018 to the end of 2018, costs rose from 1,416 million USD to a peak of 1,771 million USD in the third quarter of 2018, followed by a slight decline toward the end of that year. During 2019, costs decreased notably, stabilizing below 1,000 million USD per quarter, reaching a low point of 978 million USD in the third quarter. In 2020, a further decline is observed in the first half of the year, with the lowest point at 602 million USD in the second quarter, likely impacted by external factors affecting operations. Subsequently, costs began to recover, increasing quarterly toward the end of 2020 and continuing upward significantly through 2021, peaking at 2,159 million USD in the last quarter of that year.

Throughout 2022, cost of revenues figures remain elevated, fluctuating between 1,946 million USD and 2,429 million USD, signaling sustained high operational costs or increased production volumes. Early 2023 data suggest a modest decrease compared to the peaks of 2022 but still reflect levels considerably above the pre-2021 values.

Inventory data is absent until early 2023, when values around 200 million USD are recorded, showing mild fluctuations but no clear upward or downward trend. The corresponding inventory turnover ratio is high, starting at 42.67 and decreasing moderately through the quarters of 2023 to 31.89. This decline in turnover ratio suggests either an increase in inventory levels relative to sales or a slowing in the rate at which inventory is sold or used. Despite this, turnover remains relatively high, indicating effective inventory management overall.

Cost of Revenues

Shows a rise in early 2018 followed by decline in 2019 and early 2020, then a strong rebound and consistent increase through 2021 and 2022, with slight reduction in early 2023.

Inventory

Data only available from 2023, remains relatively stable near 200 million USD, with slight variations across quarters.

Inventory Turnover

High turnover ratios observed in 2023, with a gradual downward trend from 42.67 to 31.89, indicating slower inventory movement but still reflecting efficient inventory utilization.

The financial data over the analyzed periods reveals notable fluctuations and trends in revenues, accounts receivable, and receivables turnover ratios. These metrics collectively provide insight into the operational performance and credit management efficiency.

Revenues

The revenue figures exhibit significant volatility, with a pronounced peak in the fourth quarter of 2018 at US$ 3,708 million, followed by a sharp decline throughout 2019, reaching as low as US$ 1,589 million in the fourth quarter. A recovery pattern is evident beginning in 2020, albeit with some variability; revenues move from US$ 394 million in the second quarter to US$ 1,280 million by year-end. The trend continues with further substantial growth through 2021 and early 2022, culminating in a high of US$ 5,626 million in the third quarter of 2022. Despite a slight decrease in subsequent quarters, revenues remain elevated relative to earlier years, indicating a strong rebound. This trajectory suggests exposure to commodity price cycles or market conditions impacting the company's sales volume or pricing power.

Accounts Receivable

Accounts receivable values do not move in strict parallel with revenues, implying variations in collection timing or credit terms. After fluctuating between US$ 1,695 million and US$ 885 million from early 2018 to late 2018, receivables notably increase from early 2021 onward, reaching a peak of US$ 2,348 million in the third quarter of 2022. Despite some subsequent declines, the receivables remain elevated compared to earlier periods. The rise in receivables in periods of both revenue increase and stabilization may indicate extended credit terms or slower collections during high revenue volumes.

Receivables Turnover Ratio

The receivables turnover ratio, an indicator of collection efficiency, demonstrates a declining trend from a high of 12.13 in the first quarter of 2019 to a notably low of 4.13 in the first quarter of 2021. This downward movement implies a slowdown in the rate at which receivables are collected, which may raise concerns about cash flow management during this period. However, the ratio recovers steadily thereafter, reaching 11.88 by the third quarter of 2023, suggesting improvements in collection practices or tighter credit controls aligning with the stronger revenue levels.

In summary, the financial metrics indicate a period of volatility consistent with external market conditions affecting revenue generation, with a discernible recovery phase starting in 2020 that sustains through 2023. While the increase in accounts receivable alongside rising revenues suggests potential challenges in collections, the recovery of the receivables turnover ratio towards previous higher levels mitigates these concerns and points to effective working capital management adjustments.

The financial data reveals distinct trends in cost of revenues, accounts payable, and payables turnover ratios over the analyzed periods.

Cost of Revenues

The cost of revenues exhibited fluctuations throughout the timeline. Initially, costs increased from $1,416 million in March 2018 to $1,771 million in September 2018, followed by a moderate decline toward December 2018. The first half of 2019 showed a significant decrease, with costs stabilizing around the $1,000 million mark, reaching a low of $978 million in September 2019 and $989 million in December 2019. In 2020, costs dropped further, reaching a minimum of $602 million in June, likely reflecting market conditions during that period. However, costs started to climb back in the latter half of 2020 and continued to rise markedly through 2021 and into early 2022, peaking at $2,429 million in June 2022. Thereafter, a downward trend ensued, with costs declining to $1,770 million by September 2023. The overall pattern suggests sensitivity to market cycles and operational adjustments, with notable cost escalation in mid-2021 to mid-2022 timeframe.

Accounts Payable

Accounts payable followed a generally fluctuating pattern with some correlation to cost of revenues movements. The balances started at $862 million in March 2018, experienced a decline to $428 million by December 2019, indicating possibly improved payment terms or lower procurement volumes. A further decrease was observed in 2020, dropping to $242 million in December, coinciding with a period of reduced costs. Subsequently, payables increased gradually, reaching a high of $935 million in March 2023. A slight decrease followed in the subsequent periods, ending at $812 million in September 2023. This trend indicates expanding liability levels during periods of increased operational activity and an apparent reversal after the peak expenses period.

Payables Turnover Ratio

The payables turnover ratio, measuring how quickly the company pays its suppliers, indicates variability with some notable extremes. Starting data from March 2019 shows ratios around 9.95 to 10.5, suggesting a moderate pace of payments. In 2020, the ratio exhibited significant volatility, dropping to 5.77 in June 2021 and spiking to 12.96 by March 2021. The upward trend through 2021 and early 2022, reaching as high as 12.74 in March 2022, implies faster payments or shorter payment cycles during this period. Thereafter, it slightly decreased but remained relatively high around the 9 to 12 range until September 2023. The fluctuations may reflect changes in working capital management or supplier payment policies in response to market and operational conditions.

In summary, the cost of revenues and accounts payable demonstrate correlated cyclical trends consistent with operational scaling and contractions. The payables turnover ratio variability suggests dynamic payment practices, possibly geared towards optimizing cash flow in response to external market factors. The peak in costs and payables in 2021-2022, followed by stabilization, highlights a period of intensified business activity with subsequent normalization.

Working Capital

The working capital exhibited considerable volatility throughout the periods analyzed. From early 2018 through the end of 2019, there was an overall increasing trend, with figures peaking near the end of 2019. However, starting in 2020, the working capital experienced declining fluctuations, occasionally dipping into negative territory by mid-2023. This suggests varying liquidity conditions, with potential cash flow pressures or asset-liability management changes in recent quarters.

Revenues

Revenues fluctuated consistently over the examined timeframe. Initial values in 2018 showed moderate growth, peaking at the end of 2018, followed by a sharp decline in early 2019. Revenues rebounded steadily and reached a pronounced peak at the end of 2021. The subsequent quarters revealed a decline through 2022 and early 2023, though slight recovery was noted in the last quarter provided. Overall, revenue patterns indicate sensitivity to market or operational factors, with notable cyclical variability.

Working Capital Turnover Ratio

The working capital turnover ratio, available for selected periods starting from late 2018, displayed significant volatility. Early measurements showed a ratio around 4.85 to 7.02, reflecting typical efficiency in using working capital to generate revenues. However, extraordinary spikes occurred in mid-2021, reaching several thousand, which likely indicates data anomalies or extremely low working capital bases inflating the ratio. Post these spikes, the ratio stabilized but remained elevated compared to earlier periods, suggesting improved efficiency or reduced working capital relative to revenue generation in recent quarters.

Summary of Trends and Insights

The data reveals that working capital management and revenue generation have undergone periods of both growth and contraction. The early years (2018–2019) were characterized by increasing liquidity and variable but stable revenue growth. The onset of 2020 coincided with disruptions that impacted working capital negatively, alongside fluctuating revenues that might relate to external economic pressures. The working capital turnover ratio's extreme values in mid-2021 suggest either a data irregularity or significant operational changes influencing capital utilization efficiency. By 2023, there is evidence of continued challenges, including negative working capital figures and reduced revenue levels, though some operational efficiency might have been regained. Overall, the patterns imply a dynamic financial environment with episodes of stress, recovery, and evolving capital strategies.

Inventory Turnover

The inventory turnover ratio is only available for the last four quarters, showing a declining trend. It decreased from 42.67 in March 2023 to 31.89 in December 2023. This decline suggests a slower rate of inventory turnover over the most recent year, indicating that inventory is being sold or used less frequently each quarter within that period.

Average Inventory Processing Period

Corresponding to the inventory turnover data, the average inventory processing period also exhibits a slight increase over the same four quarters. It remained stable at 9 days for three quarters before increasing to 11 days in the last quarter reported (December 2023). This increase aligns with the declining turnover ratio, implying that inventory is held longer before being processed or sold.

Overall Insight

The available data points suggest a recent shift toward slower inventory movement. A decreasing turnover ratio coupled with an increasing processing period may reflect changes in demand, supply chain dynamics, or inventory management efficiency. Without earlier data for comparison, it is not possible to assess longer-term trends, but the short-term indicators point towards a reduction in inventory velocity over the past year.

The analysis of the receivables turnover ratio and the average receivable collection period reveals fluctuating trends over the examined periods.

Receivables Turnover Ratio

The receivables turnover ratio indicates how efficiently receivables are collected. Starting from a ratio of 12.13 in March 2018, the ratio exhibits a decline through 2019, dropping to a low of 7.48 in March 2020. Subsequently, it improves significantly by June 2020 to 12.17, followed by downward variability throughout 2021, reaching a minimum near 5.51 in June 2021. From this low point, the ratio recovers incrementally, peaking again at 11.88 in September 2023 before slightly declining to 8.32 in the last available period. This pattern indicates periods of both efficient and less efficient collections, with the most notable efficiency dip occurring in mid-2021.

Average Receivable Collection Period

This metric, measuring the average number of days to collect receivables, moves inversely to the turnover ratio. Initially stable around 30 to 34 days in early 2018, there is a marked increase in 2019 and 2020, reaching a peak of 88 days in March 2021. This prolonged collection period corresponds with the lowest turnover ratio observed in June 2021, indicating slower creditor payments during this interval. Following the peak, the collection period generally improves, declining to around 31 to 33 days by late 2023, aligning with the improved turnover ratio values.

Overall, the data suggest that receivables management experienced considerable volatility, with a significant decrease in efficiency around 2020 to mid-2021, likely reflecting external or internal challenges affecting collections. Afterward, improvements indicate a return toward more effective credit control and collection efforts in subsequent periods.

Average Inventory Processing Period

The average inventory processing period data is available only for the most recent quarters, starting from March 31, 2023. It exhibits a slight increase from 9 days in the first three reported quarters to 11 days in the quarter ending December 31, 2023. This indicates a minor lengthening in the time taken to process inventory toward the end of the period.

Average Receivable Collection Period

The average receivable collection period shows significant variability over the reported periods. From the earliest available data in March 31, 2018 (30 days), it increased sharply to a peak of 88 days in June 30, 2021. Following this peak, there was a general downward trend, with the period declining to 31 days by September 30, 2023. This suggests that the company initially experienced slower receivable collections, reaching a maximum delay in mid-2021, but has since improved its collection efficiency significantly.

Operating Cycle

The operating cycle data is reported only for the last four quarters, starting March 31, 2023. It moved from 43 days to 55 days by December 31, 2023, indicating an increase in the total time taken to convert inventory and receivables into cash. This rising trend in the operating cycle aligns with the observed increase in inventory processing time but contrasts with the improvement seen in receivable collection during the same period.

Payables Turnover Ratio

The payables turnover ratio displays notable fluctuations throughout the observed periods, with a general range between approximately 5.77 and 12.96. Beginning from 9.95 in March 2019, the ratio increases slightly until mid-2019, reaching around 10.5 before declining to 7.8 by December 2020. A marked peak occurs in March 2021 at 12.96, which is the highest point recorded during this timeframe. Post this peak, there is a pronounced decline to 5.77 in June 2021, followed by a recovery trend where the ratio stabilizes around 8.5 to 12.7 between the end of 2021 and late 2022. Entering 2023, the turnover ratio decreases again, settling near 9.15 by September 2023. This variability indicates shifting payment dynamics with suppliers, likely reflecting changes in purchasing activities or cash management strategies.

Average Payables Payment Period (Days)

The average payables payment period generally exhibits inverse movements relative to the payables turnover ratio, spanning from 28 to 63 days. Initially, in March 2019, the payment period stands at 37 days, decreasing to 35 days mid-2019, then increasing moderately to 40 days by the end of that year. The payment period peaks significantly at 63 days in March 2021, corresponding to the lowest payables turnover ratio observed around the same period, indicating a lengthening of the days taken to pay suppliers. Subsequently, the period shortens to about 28 to 29 days through mid-2021 and early 2022, suggesting a tightening in payment terms or faster payments. For the remainder of the timeline until September 2023, the payment period hovers between 29 and 40 days, with a tendency toward gradual elongation toward the end of the period, reaching 40 days in the most recent quarters. This pattern reflects a dynamic payment strategy, potentially responsive to liquidity management and vendor relationship considerations.

Overall Analysis

The trends demonstrate an oscillating pattern in both payables turnover and payment periods, with evident inverse correlation as expected. Peaks in payables turnover coincide with shorter payment periods whereas troughs align with elongated payment days. The sharp changes in early 2021 suggest a deliberate shift in payment policy or external influences impacting payables management. The relative stabilization towards the later quarters implies a return to more consistent payables practices. Such variability could arise from operational adjustments, market conditions, or financial strategy alterations aimed at optimizing working capital. Continued monitoring of these ratios is advisable to assess the impact on liquidity and supplier relationships.

Average Inventory Processing Period

This metric shows a stable pattern around 9 days for most of the periods where data is provided, specifically from March 2023 to September 2023. The only deviation occurs in December 2023, where the period increases slightly to 11 days, indicating a minor lengthening in the average time inventory is held before processing.

Average Receivable Collection Period

The average receivable collection period exhibits notable fluctuations over the dataset. Starting from 30 days in March 2018, it increased to 39 days in June 2018, followed by a slight decline to 34 days by December 2018. There is a sharp spike observed in March 2021 at 88 days, representing the peak of collection delays. Post this peak, the period gradually decreased but remained elevated relative to earlier years, fluctuating between 31 and 49 days from March 2022 through September 2023. This indicates a trend of increased collection times in recent years with some improvement in the latest quarters.

Average Payables Payment Period

The average payables payment period shows variability without a clear linear trend. Initially recorded at 37 days in March 2018, it fluctuates across quarters, peaking at 63 days in March 2021. Following this peak, the payment period decreases to a range between 29 and 40 days across subsequent periods until September 2023, where it stabilizes around 40 days. The data suggests attempts to manage payment timings more efficiently after the high observed in early 2021.

Cash Conversion Cycle

The cash conversion cycle data are sparse and only provided for the last four quarters. It shows values of 6 days in March 2023, missing data for June 2023, then 2 days for September 2023, and rising to 15 days in December 2023. This points to relatively short cash conversion periods with a slight increase in the most recent quarter, which may reflect changes in working capital management or operational efficiency.