Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Hess Corp., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The investment activity ratios indicate a period of diminished asset efficiency peaking in 2020, followed by a significant and accelerating recovery through 2022. The general trajectory suggests a substantial improvement in the company's ability to generate revenue from its long-term capital investments and equity base.
- Fixed Asset Productivity
- Net fixed asset turnover, both including and excluding operating lease right-of-use assets, followed a synchronized trend. Both metrics declined from 2018 levels to a trough in 2020, with the standard net fixed asset turnover dropping from 0.39 to 0.33. Subsequently, a sharp upward trend emerged, with the ratio climbing to 0.74 by December 31, 2022, indicating a marked increase in the revenue generated per unit of fixed assets.
- Total Asset Utilization
- Total asset turnover remained stagnant at 0.30 between 2018 and 2019 before decreasing to 0.25 in 2020. From 2021 onward, there was a notable expansion in efficiency, with the ratio reaching 0.52 by 2022. This progression reflects a broader improvement in the operational utility of the entire asset base relative to sales output.
- Equity Efficiency
- Equity turnover demonstrated a consistent and uninterrupted growth pattern over the analyzed five-year period. The ratio rose steadily from 0.66 in 2018 to 1.44 in 2022. This linear increase suggests a progressive optimization of shareholder equity, with the company generating significantly more revenue for every dollar of equity invested as the period progressed.
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Net Fixed Asset Turnover
Hess Corp., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Property, plant and equipment, net, including finance lease right-of-use assets | 15,224) | 14,326) | 14,283) | 17,113) | 16,083) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 0.74 | 0.52 | 0.33 | 0.38 | 0.39 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Chevron Corp. | 1.64 | 1.06 | — | — | — | |
| ConocoPhillips | 1.21 | 0.71 | — | — | — | |
| Exxon Mobil Corp. | 1.95 | 1.28 | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.73 | 1.12 | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Energy | 1.77 | 1.15 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Sales and other operating revenues ÷ Property, plant and equipment, net, including finance lease right-of-use assets
= 11,324 ÷ 15,224 = 0.74
2 Click competitor name to see calculations.
The net fixed asset turnover ratio exhibited a period of volatility followed by a strong upward trajectory between 2018 and 2022. After reaching a low point in 2020, the ratio improved significantly, indicating a marked increase in the efficiency with which long-term assets were utilized to generate operating revenue.
- Revenue Generation Efficiency
- The net fixed asset turnover ratio declined from 0.39 in 2018 to a minimum of 0.33 in 2020. This contraction was primarily driven by a significant drop in sales and other operating revenues, which decreased from 6,495 million US dollars in 2019 to 4,667 million US dollars in 2020. A rapid recovery followed, with the ratio rising to 0.52 in 2021 and reaching 0.74 by the end of 2022, signaling a strong recovery in revenue-generating capacity.
- Fixed Asset Base Dynamics
- Net property, plant, and equipment showed less volatility than total revenues. The asset base peaked in 2019 at 17,113 million US dollars before decreasing to 14,283 million US dollars in 2020. While assets grew to 15,224 million US dollars by 2022, this growth was modest compared to the surge in revenues, which climbed to 11,324 million US dollars in the same year.
- Asset Productivity Analysis
- The acceleration of the turnover ratio from 0.33 in 2020 to 0.74 in 2022 demonstrates a substantial improvement in asset productivity. The capacity to generate more than double the revenue per unit of net fixed assets by 2022 compared to 2020 suggests an optimized utilization of the investment base during a period of strong revenue growth.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Hess Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Property, plant and equipment, net, including finance lease right-of-use assets | 15,224) | 14,326) | 14,283) | 17,113) | 16,083) | |
| Operating lease right-of-use assets, net | 570) | 352) | 426) | 447) | —) | |
| Property, plant and equipment, net, including finance lease right-of-use assets (including operating lease, right-of-use asset) | 15,794) | 14,678) | 14,709) | 17,560) | 16,083) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 0.72 | 0.51 | 0.32 | 0.37 | 0.39 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Chevron Corp. | 1.59 | 1.03 | — | — | — | |
| ConocoPhillips | 1.20 | 0.70 | — | — | — | |
| Exxon Mobil Corp. | 1.89 | 1.24 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.68 | 1.09 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Energy | 1.72 | 1.12 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Sales and other operating revenues ÷ Property, plant and equipment, net, including finance lease right-of-use assets (including operating lease, right-of-use asset)
= 11,324 ÷ 15,794 = 0.72
2 Click competitor name to see calculations.
The efficiency of fixed asset utilization exhibited a V-shaped recovery between 2018 and 2022, characterized by an initial decline followed by a period of rapid acceleration. The net fixed asset turnover ratio reached a five-year low of 0.32 in 2020 before climbing significantly to 0.72 by the end of 2022.
- Net Fixed Asset Turnover Trends
- A downward trend in turnover is observed from 2018 to 2020, with the ratio decreasing from 0.39 to 0.32. This decline is directly correlated with a contraction in sales and other operating revenues, which fell to a period low of US$ 4,667 million in 2020. Following this trough, a sharp reversal occurred; the ratio improved to 0.51 in 2021 and reached 0.72 in 2022, representing more than a twofold increase in efficiency compared to the 2020 levels.
- Revenue and Asset Base Correlation
- The acceleration of the turnover ratio in the final two years of the period was driven by an aggressive increase in operating revenues rather than a contraction of the asset base. While revenues grew from US$ 4,667 million in 2020 to US$ 11,324 million in 2022, net property, plant, and equipment—including right-of-use assets—remained relatively stable, shifting from US$ 14,709 million in 2020 to US$ 15,794 million in 2022. This suggests that the revenue growth was achieved through significantly higher productivity of existing assets or favorable market conditions rather than through proportional capital expansion.
- Investment Efficiency Analysis
- The data indicates a transition from a period of underutilization or declining returns on fixed assets (2018-2020) to a period of high operational leverage (2021-2022). The fact that the turnover ratio in 2022 (0.72) significantly exceeded the 2018 level (0.39), despite the total asset base remaining within a similar range, underscores a substantial improvement in the company's capacity to convert its long-term investment in fixed assets into top-line growth.
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Total Asset Turnover
Hess Corp., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Total assets | 21,695) | 20,515) | 18,821) | 21,782) | 21,433) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.52 | 0.36 | 0.25 | 0.30 | 0.30 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Chevron Corp. | 0.91 | 0.65 | — | — | — | |
| ConocoPhillips | 0.84 | 0.51 | — | — | — | |
| Exxon Mobil Corp. | 1.08 | 0.82 | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.99 | 0.71 | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Energy | 0.97 | 0.71 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Sales and other operating revenues ÷ Total assets
= 11,324 ÷ 21,695 = 0.52
2 Click competitor name to see calculations.
An analysis of the total asset turnover from 2018 to 2022 reveals a period of initial stability followed by a sharp contraction and a subsequent significant acceleration in asset efficiency. The most pronounced shift occurred between 2020 and 2022, during which the company experienced a substantial increase in its ability to generate revenue relative to its asset base.
- Total Asset Turnover Trend
- The turnover ratio remained constant at 0.30 through 2019 before declining to 0.25 in 2020. This low point coincided with a significant drop in sales and other operating revenues to 4,667 million US$. A strong recovery followed, with the ratio increasing to 0.36 in 2021 and reaching a period high of 0.52 by December 31, 2022.
- Revenue and Asset Correlation
- Revenue volatility served as the primary driver for the fluctuations in the turnover ratio. While total assets remained relatively range-bound, fluctuating between a low of 18,821 million US$ in 2020 and a high of 21,782 million US$ in 2019, revenues grew aggressively in the final two years of the period. The jump to 11,324 million US$ in 2022, paired with a moderate asset base of 21,695 million US$, resulted in the peak efficiency ratio observed.
- Asset Utilization Efficiency
- The transition from a ratio of 0.25 in 2020 to 0.52 in 2022 indicates a marked improvement in operational efficiency. The more than twofold increase in the turnover ratio over this two-year span suggests that the company successfully leveraged its long-term investments to drive a disproportionate increase in top-line growth.
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Equity Turnover
Hess Corp., equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales and other operating revenues | 11,324) | 7,473) | 4,667) | 6,495) | 6,323) | |
| Total Hess Corporation stockholders’ equity | 7,855) | 6,300) | 5,366) | 8,732) | 9,629) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 1.44 | 1.19 | 0.87 | 0.74 | 0.66 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Chevron Corp. | 1.48 | 1.12 | — | — | — | |
| ConocoPhillips | 1.64 | 1.01 | — | — | — | |
| Exxon Mobil Corp. | 2.04 | 1.64 | — | — | — | |
| Equity Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.77 | 1.35 | — | — | — | |
| Equity Turnover, Industry | ||||||
| Energy | 1.76 | 1.36 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Sales and other operating revenues ÷ Total Hess Corporation stockholders’ equity
= 11,324 ÷ 7,855 = 1.44
2 Click competitor name to see calculations.
A consistent upward trend in equity turnover is observed between 2018 and 2022, indicating a progressive increase in the efficiency with which equity is utilized to generate revenue. The ratio grew steadily from 0.66 in 2018 to 1.44 by the end of 2022, reflecting a significant improvement in operational leverage over the five-year period.
- Revenue Dynamics
- Operating revenues exhibited significant volatility, characterized by a sharp contraction in 2020 to 4,667 million US dollars. This downturn was followed by a robust recovery in 2021 and a substantial surge in 2022, where revenues reached a peak of 11,324 million US dollars. The aggressive growth in the final two years of the period served as the primary catalyst for the improved turnover ratio.
- Equity Evolution
- Total stockholders' equity experienced a downward trajectory from 2018 through 2020, declining from 9,629 million US dollars to a low of 5,366 million US dollars. A gradual recovery followed, with equity increasing to 7,855 million US dollars by December 31, 2022. The reduction in the equity base during the middle of the period mathematically contributed to the rise in the turnover ratio, even before the subsequent revenue surge.
- Equity Turnover Analysis
- The equity turnover ratio demonstrated a continuous year-over-year increase. The transition from a ratio below 1.0 in 2018-2020 to a ratio exceeding 1.0 in 2021 and 2022 signifies a shift in the company's ability to generate more than one dollar of revenue for every dollar of equity invested. The peak ratio of 1.44 in 2022 suggests an optimized relationship between the capital base and revenue-generating activities.
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