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)
Marathon Oil Corp., long-term (investment) activity ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
The long-term activity ratios exhibit a consistent pattern of volatility characterized by a significant decline in 2020 followed by a robust recovery in 2021. Across all measured metrics, asset and equity utilization reached a five-year low in 2020, coinciding with a period of diminished operational efficiency in generating revenue relative to the investment base. However, by the end of 2021, all turnover ratios surpassed their 2017 baseline levels, indicating an overall improvement in long-term asset productivity over the analyzed period.
- Net Fixed Asset Turnover
- The ratio of net fixed asset turnover demonstrated a fluctuating trajectory, rising from 0.25 in 2017 to 0.35 in 2018, before declining to a minimum of 0.20 in 2020. A sharp recovery occurred in 2021, with the ratio reaching its peak at 0.39. The inclusion of operating lease right-of-use assets resulted in negligible variances, with the adjusted ratio mirroring the primary trend and ending at 0.38 in 2021. This suggests that right-of-use assets do not significantly impact the overall interpretation of fixed asset efficiency.
- Total Asset Turnover
- Total asset turnover followed a similar cyclical pattern, increasing from 0.20 in 2017 to a peak of 0.28 in 2018. A downward trend was observed through 2020, where the ratio fell to 0.17. The subsequent rebound to 0.33 in 2021 represents the highest level of total asset efficiency in the reported period, suggesting a more effective deployment of the total asset base to generate sales.
- Equity Turnover
- Equity turnover showed the most pronounced fluctuations among the activity ratios. Starting at 0.37 in 2017, it climbed to 0.49 in 2018 and dropped to 0.29 in 2020. The recovery in 2021 was substantial, reaching 0.52. The higher magnitude of this ratio compared to asset turnover indicates a more aggressive utilization of shareholder equity to drive revenue growth, particularly in the final year of the period.
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Net Fixed Asset Turnover
Marathon Oil Corp., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Property, plant and equipment, including finance lease ROU assets, less accumulated depreciation, depletion and amortization | 14,527) | 15,638) | 17,000) | 16,804) | 17,665) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 0.39 | 0.20 | 0.30 | 0.35 | 0.25 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Chevron Corp. | 1.06 | — | — | — | — | |
| ConocoPhillips | 0.71 | — | — | — | — | |
| Exxon Mobil Corp. | 1.28 | — | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.12 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Energy | 1.15 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Revenues ÷ Property, plant and equipment, including finance lease ROU assets, less accumulated depreciation, depletion and amortization
= 5,601 ÷ 14,527 = 0.39
2 Click competitor name to see calculations.
The analysis of long-term investment activity between 2017 and 2021 reveals a volatile trend in asset efficiency, characterized by a significant contraction in 2020 and a subsequent recovery to a five-year peak in 2021. The overall trajectory indicates a strategic or operational shift resulting in a leaner asset base coupled with fluctuating revenue generation.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio exhibited substantial volatility, starting at 0.25 in 2017 and reaching a high of 0.39 by 2021. An initial increase to 0.35 was observed in 2018, followed by a decline to 0.30 in 2019 and a period low of 0.20 in 2020. The recovery in 2021 represents the most efficient utilization of fixed assets within the analyzed period.
- Revenue Impact on Efficiency
- Revenue fluctuations served as the primary driver for the changes in the turnover ratio. The sharp decline in revenues to US$ 3,097 million in 2020 directly contributed to the ratio's drop to 0.20. Conversely, the resurgence of revenues to US$ 5,601 million in 2021, combined with a reduced asset base, accelerated the turnover ratio to its peak of 0.39.
- Fixed Asset Base Evolution
- A consistent downward trend is observed in the value of property, plant, and equipment. The net asset base decreased from US$ 17,665 million in 2017 to US$ 14,527 million in 2021. This reduction in the denominator of the turnover calculation suggests that the increase in efficiency seen in 2021 was achieved not only through revenue growth but also through a reduction in the total investment in long-term physical assets.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Marathon Oil Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Property, plant and equipment, including finance lease ROU assets, less accumulated depreciation, depletion and amortization | 14,527) | 15,638) | 17,000) | 16,804) | 17,665) | |
| Operating lease right-of-use (ROU) assets (located in Other noncurrent assets) | 59) | 133) | 199) | —) | —) | |
| Property, plant and equipment, including finance lease ROU assets, less accumulated depreciation, depletion and amortization (including operating lease, right-of-use asset) | 14,586) | 15,771) | 17,199) | 16,804) | 17,665) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 0.38 | 0.20 | 0.29 | 0.35 | 0.25 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Chevron Corp. | 1.03 | — | — | — | — | |
| ConocoPhillips | 0.70 | — | — | — | — | |
| Exxon Mobil Corp. | 1.24 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.09 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Energy | 1.12 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenues ÷ Property, plant and equipment, including finance lease ROU assets, less accumulated depreciation, depletion and amortization (including operating lease, right-of-use asset)
= 5,601 ÷ 14,586 = 0.38
2 Click competitor name to see calculations.
The efficiency of long-term asset utilization experienced significant volatility from 2017 through 2021, characterized by a cyclical pattern that closely aligns with revenue fluctuations despite a consistent contraction in the net fixed asset base.
- Net Fixed Asset Turnover Trends
- The turnover ratio fluctuated from 0.25 in 2017 to a peak of 0.38 in 2021. A notable decline occurred in 2020, where the ratio reached its lowest point of 0.20. This dip coincided with a substantial decrease in revenues, which fell to $3,097 million, indicating a temporary decline in the capacity to generate sales relative to the value of fixed assets.
- Asset Base Contraction
- Net fixed assets, including right-of-use assets, exhibited a general downward trend over the five-year period, decreasing from $17,665 million in 2017 to $14,586 million in 2021. This reduction in the asset base contributed to the improvement of the turnover ratio in 2021, as the entity generated higher revenue from a smaller pool of fixed investments.
- Revenue Correlation and Productivity
- A strong correlation is observed between revenue volatility and asset turnover. The ratio increased to 0.35 in 2018 and 0.38 in 2021, primarily driven by revenue growth. The 2021 peak represents the highest level of asset productivity within the analyzed period, reflecting a combined effect of revenue recovery and a streamlined asset structure.
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Total Asset Turnover
Marathon Oil Corp., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Total assets | 16,994) | 17,956) | 20,245) | 21,321) | 22,012) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.33 | 0.17 | 0.25 | 0.28 | 0.20 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Chevron Corp. | 0.65 | — | — | — | — | |
| ConocoPhillips | 0.51 | — | — | — | — | |
| Exxon Mobil Corp. | 0.82 | — | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.71 | — | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Energy | 0.71 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Revenues ÷ Total assets
= 5,601 ÷ 16,994 = 0.33
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by significant revenue volatility coupled with a consistent contraction of the asset base, leading to a fluctuating but ultimately improving total asset turnover ratio.
- Revenue Trends
- Revenues exhibited substantial instability over the five-year period. After an initial increase from US$ 4,373 million in 2017 to a peak of US$ 5,902 million in 2018, a downward trajectory followed, culminating in a sharp decline to US$ 3,097 million by 2020. A strong recovery was observed in 2021, with revenues rising back to US$ 5,601 million.
- Asset Base Management
- A steady and uninterrupted downward trend in total assets is evident. Assets decreased from US$ 22,012 million in 2017 to US$ 16,994 million in 2021. This continuous reduction suggests a strategic downsizing of the asset base or significant depreciation and impairment of long-term investments over the period.
- Total Asset Turnover Analysis
- The total asset turnover ratio mirrored the volatility of revenues while being influenced by the shrinking asset base. The ratio rose from 0.20 in 2017 to 0.28 in 2018, before dipping to a period low of 0.17 in 2020, coinciding with the significant drop in revenue. However, by 2021, the ratio reached its peak at 0.33. This final increase indicates an improvement in operational efficiency, as the company generated higher revenues from a significantly smaller asset base compared to the start of the analyzed period.
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Equity Turnover
Marathon Oil Corp., equity turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 5,601) | 3,097) | 5,063) | 5,902) | 4,373) | |
| Stockholders’ equity | 10,686) | 10,561) | 12,153) | 12,128) | 11,708) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 0.52 | 0.29 | 0.42 | 0.49 | 0.37 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Chevron Corp. | 1.12 | — | — | — | — | |
| ConocoPhillips | 1.01 | — | — | — | — | |
| Exxon Mobil Corp. | 1.64 | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.35 | — | — | — | — | |
| Equity Turnover, Industry | ||||||
| Energy | 1.36 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Revenues ÷ Stockholders’ equity
= 5,601 ÷ 10,686 = 0.52
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a volatile trend in asset utilization efficiency from 2017 to 2021. The correlation between revenue fluctuations and equity turnover indicates that the efficiency of capital employment is heavily dependent on market-driven revenue changes rather than structural shifts in the stockholders' equity base.
- Equity Turnover Volatility
- The equity turnover ratio experienced significant fluctuations, starting at 0.37 in 2017, reaching a minimum of 0.29 in 2020, and peaking at 0.52 in 2021. This trajectory reflects an inconsistent ability to generate sales relative to the equity base over the five-year period.
- Revenue Correlation
- A direct relationship is observed between revenue performance and the turnover ratio. The increase in revenues from 4,373 million USD in 2017 to 5,902 million USD in 2018 drove the ratio up to 0.49. Conversely, the sharp contraction in revenues to 3,097 million USD in 2020 resulted in the lowest efficiency ratio of the analyzed period.
- Equity Base Stability
- Stockholders' equity remained relatively stable, ranging between 10,561 million USD and 12,153 million USD. Because the equity base did not fluctuate as drastically as the revenues, the volatility in the equity turnover ratio is primarily attributed to operational revenue swings rather than significant changes in the capital structure.
- Efficiency Recovery
- A strong recovery is evident in 2021, where revenues climbed to 5,601 million USD, propelling the equity turnover to 0.52. This represents the highest efficiency level within the observed timeframe, indicating an improved capacity to leverage shareholders' funds to generate top-line growth following the 2020 downturn.
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