Kinder Morgan Inc. (NYSE:KMI)

Inventory Turnover

The inventory turnover ratio fluctuated over the five-year period, beginning at 10.11 in 2015, slightly decreasing to 9.8 in 2016, then rising above 10 in 2017 and peaking at 11.48 in 2018. However, it declined significantly to 8.8 in 2019, indicating a slowdown in inventory management efficiency during the last year.

Receivables Turnover

The receivables turnover ratio showed a general downward trend from 10.95 in 2015 to around 9.44 in 2018, indicating a slower collection of receivables over time. There was a slight increase to 9.64 in 2019, but the ratio remained below the initial level, suggesting an overall deterioration in receivable collection efficiency.

Payables Turnover

Payables turnover experienced fluctuations, starting at 3.11 in 2015, decreasing to 2.78 in 2016, then recovering and increasing steadily to 3.57 in 2019. This suggests that the company took longer to pay suppliers initially but improved payment efficiency in the later years.

Average Inventory Processing Period

This metric remained fairly stable around 36-37 days from 2015 to 2017, decreased to 32 days in 2018, and then increased notably to 42 days in 2019. The rise in 2019 indicates an increase in the time inventory was held before being sold, which complements the decline in inventory turnover observed that year.

Average Receivable Collection Period

The average number of days to collect receivables increased from 33 days in 2015 to 39 days by 2017 and 2018, then slightly improved to 38 days in 2019. The longer collection periods during most of the span correspond with the decreasing receivables turnover, suggesting slower cash inflows from customers.

Operating Cycle

The operating cycle lengthened from 69 days in 2015 to a peak of 80 days in 2019, with some fluctuations in between. This indicates that the combined time to turn inventory and receivables into cash extended over the period, reflecting overall slower operational efficiency in managing working capital.

Average Payables Payment Period

The average period to pay suppliers increased from 117 days in 2015 to 131 days in 2016, followed by a decreasing trend to 102 days by 2019. This suggests the company initially stretched payables but subsequently improved payment timeliness, possibly to maintain supplier relationships or respond to credit terms.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the period, starting at -48 days in 2015, reaching a more favorable -56 days in 2016, then deteriorating to -38 and -39 days in 2017 and 2018, before improving somewhat to -22 days in 2019. While still negative (indicating the company was collecting cash before paying suppliers), the trend toward less negative values implies a shortening of the cash flow advantage.

Costs of Sales

The costs of sales exhibited a fluctuating pattern over the five-year period. Initially, there was a decrease from 4115 million US dollars in 2015 to 3498 million in 2016. This was followed by an increase in 2017 to 4345 million, and a slight rise to 4421 million in 2018. The figure then sharply decreased to 3263 million in 2019, representing the lowest cost within the analyzed timeframe.

Inventories

The inventory levels generally showed moderate variability. A decrease was observed from 407 million US dollars in 2015 to 357 million in 2016. This was succeeded by an increase in 2017, reaching 424 million, followed by a reduction trend in both 2018 and 2019, ending at 371 million. Overall, inventory levels remained within a relatively narrow range.

Inventory Turnover Ratio

The inventory turnover ratio displayed some variability, indicating changes in the rate at which inventory was sold and replaced. The ratio declined slightly from 10.11 in 2015 to 9.8 in 2016, then improved to 10.25 in 2017. It further increased to a peak of 11.48 in 2018, suggesting more efficient inventory management during that year. However, the ratio dropped to 8.8 in 2019, indicating a slower turnover relative to prior years.

Revenues

The revenue figures exhibit some fluctuations over the five-year period. Revenues initially decreased from 14,403 million USD in 2015 to 13,058 million USD in 2016. The following years show a recovery with revenues increasing to 13,705 million USD in 2017 and further to 14,144 million USD in 2018, before declining again to 13,209 million USD in 2019. Overall, revenues show a pattern of moderate volatility without a clear, consistent upward or downward trend.

Accounts Receivable, Net

Net accounts receivable demonstrate a gradual upward trend between 2015 and 2018, increasing from 1,315 million USD to 1,498 million USD. However, in 2019, this amount declines to 1,370 million USD, returning to a level close to that seen in 2016. This pattern indicates a general build-up of receivables over most of the period, followed by a reduction in the final year observed.

Receivables Turnover

The receivables turnover ratio shows a declining trend from 10.95 in 2015 to 9.44 in 2018, implying that accounts receivable were collected less frequently or more slowly each year. In 2019, the ratio slightly improves to 9.64, suggesting a marginal increase in collection efficiency. Despite the slight rebound, the overall trend reflects a decrease in the speed at which receivables are converted into cash over the period.

Costs of sales

The costs of sales exhibited fluctuations over the five-year period under review. Initially, there was a decline from 4,115 million USD in 2015 to 3,498 million USD in 2016, followed by an increase in 2017 reaching 4,345 million USD, with a slight rise continuing to 4,421 million USD in 2018. A notable decrease occurred in 2019, bringing costs down to 3,263 million USD. Overall, the costs of sales showed variability, with a peak in 2018 before falling significantly in the final year.

Accounts payable

Accounts payable amounts demonstrated a general downward trend during the period. From 1,324 million USD at the end of 2015, it slightly decreased in the following years, maintaining stability around the 1,300 million USD range until 2018, then sharply declining to 914 million USD by the end of 2019. This suggests a reduced obligation towards suppliers or better payment management in the last year reported.

Payables turnover ratio

The payables turnover ratio showed a consistent improving pattern throughout the five years. Starting at 3.11 in 2015, it decreased in 2016 to 2.78, indicating slower payments to suppliers. However, from 2017 onwards, the ratio increased steadily to 3.24, 3.31, and finally 3.57 in 2019, reflecting faster turnover of payables and potentially more efficient management of accounts payable.

Working Capital

The working capital values demonstrate a consistent negative position throughout the reported years, indicating that current liabilities exceed current assets each year. The deficit worsened from -1,241 million USD at the end of 2015 to a low point of -3,466 million USD by the end of 2017. Subsequently, this negative working capital situation improved somewhat in 2018 and 2019, with reported values of -1,835 million USD and -1,862 million USD respectively, suggesting a partial recovery but still reflecting a negative working capital position.

Revenues

Revenue figures show some volatility over the period. Revenues started at 14,403 million USD in 2015 and declined to 13,058 million USD in 2016. This was followed by a moderate increase to 13,705 million USD in 2017 and a further rise to 14,144 million USD in 2018. However, revenues decreased again in 2019 to 13,209 million USD. Overall, the revenues fluctuated within a relatively narrow range but do not show a clear growth trend over the five years.

Working Capital Turnover

Data for working capital turnover ratio is not provided, precluding analysis of how efficiently the company is utilizing its working capital to generate revenues.

The data reflects annual changes in inventory management metrics over a five-year period.

Inventory Turnover

The inventory turnover ratio shows fluctuations, starting at 10.11 in 2015, slightly declining to 9.8 in 2016, then increasing to 10.25 in 2017, reaching a peak of 11.48 in 2018 before decreasing notably to 8.8 in 2019. This indicates variability in the rate at which inventory is sold and replaced, with the highest turnover observed in 2018, followed by a significant downturn in 2019.

Average Inventory Processing Period

The average inventory processing period mirrors the inverse trend of the turnover ratio. The number of days inventory is held increased from 36 days in 2015 to 37 days in 2016, then decreased to 36 days in 2017 and further to a low of 32 days in 2018, indicating faster inventory processing that year. However, it then rises sharply to 42 days in 2019, suggesting a slowdown in processing or increased inventory holding time.

Overall, the metrics indicate that 2018 was a year of enhanced efficiency in inventory turnover, with the fastest processing period and highest turnover ratio. In contrast, 2019 shows a decline in efficiency, with the turnover ratio dropping significantly and the processing period increasing to the highest level in the observed period. These shifts could point to changes in operational strategy, market conditions, or supply chain factors affecting inventory management.

Receivables Turnover

The receivables turnover ratio shows a declining trend from 10.95 in 2015 to 9.44 in 2018, with a slight increase to 9.64 in 2019. This decrease over the initial four years indicates that the company was collecting its receivables less frequently during that period. The modest rebound in 2019 suggests a slight improvement in the frequency of collections.

Average Receivable Collection Period

The average receivable collection period increased from 33 days in 2015 to 39 days by 2017 and remained stable at that level through 2018, with a minor reduction to 38 days in 2019. This reflects a lengthening of the time taken to collect receivables, consistent with the decreasing receivables turnover observed.

Overall Analysis

There is a clear inverse relationship between the receivables turnover ratio and the average collection period, as expected. The trends indicate that over the five-year period, the company experienced a slowdown in receivable collections, stabilizing somewhat towards the end of the period. The slight improvements noted in 2019 may reflect efforts to enhance collection efficiency or changes in credit policy.

Average Inventory Processing Period

The average inventory processing period remained relatively stable between 2015 and 2017, fluctuating slightly between 36 and 37 days. In 2018, there was a noticeable decrease to 32 days, indicating an improvement in inventory turnover. However, this trend reversed in 2019, with the period increasing significantly to 42 days, suggesting a slowdown in inventory processing efficiency.

Average Receivable Collection Period

The average receivable collection period showed a consistent increase from 33 days in 2015 to 39 days by 2017, then stabilizing around 38 to 39 days through 2019. This indicates that the company took longer to collect receivables over time, potentially affecting cash flow management.

Operating Cycle

The operating cycle lengthened from 69 days in 2015 to 75 days in 2016 and 2017, reflecting combined effects of inventory and receivables management. It briefly improved to 71 days in 2018, but extended sharply to 80 days in 2019, the highest value in the observed period. This suggests a lengthening in the overall time from inventory acquisition to receivables collection, possibly indicating operational inefficiencies or changes in business conditions in 2019.

Payables Turnover

There is an overall increasing trend in the payables turnover ratio from 2015 to 2019. The ratio decreased from 3.11 in 2015 to 2.78 in 2016 but then steadily rose each year, reaching 3.57 by the end of 2019. This suggests an improvement in the company’s ability to pay off its suppliers more quickly over the period.

Average Payables Payment Period

The average payables payment period, measured in days, shows a declining trend across the five-year span. It started at 117 days in 2015, increased to 131 days in 2016, and then consistently decreased each subsequent year to 102 days by the end of 2019. This pattern indicates that the company has been reducing the time it takes to settle its accounts payable, aligning with the rising payables turnover ratio.

Overall Analysis

The inverse relationship observed between the payables turnover ratio and the average payables payment period reflects an improving efficiency in managing payables. The company has reduced its payment cycle length, which may positively impact supplier relationships and possibly negotiations for better terms. The steady improvement from 2016 onwards suggests a strategic focus on optimizing working capital management related to payables.

Average Inventory Processing Period

The average inventory processing period exhibits minor fluctuations throughout the period analyzed. It remained relatively stable at around 36 to 37 days between 2015 and 2017, decreased notably to 32 days in 2018, followed by a sharp increase to 42 days in 2019. This indicates variability in the time taken to process inventory, with a significant elongation in the final year observed.

Average Receivable Collection Period

The average receivable collection period demonstrates a gradual upward trend from 33 days in 2015 to 39 days by 2017, maintaining this level through 2018 before slightly decreasing to 38 days in 2019. This pattern suggests a general increase in the time required to collect receivables, with a marginal improvement in the last year of the period.

Average Payables Payment Period

The average payables payment period initially increased from 117 days in 2015 to 131 days in 2016, indicating a longer duration taken to settle payables. Thereafter, the period decreased steadily over the following years, reaching 102 days in 2019, reflecting a faster payment cycle in later years.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the entire period, which is indicative of the company effectively managing its working capital by delaying payments beyond the time needed to process inventory and collect receivables. The cycle lengthened from -48 days in 2015 to -56 days in 2016, then contracted progressively to -22 days by 2019. This trend shows a reduction in the company's efficiency in cash flow conversion in more recent years, suggesting a shift toward a shorter operating cycle or changes in payment terms.