Marathon Oil Corp. (NYSE:MRO)

The analysis of the financial turnover ratios and related cycle periods over the indicated quarters reveals several notable trends and fluctuations.

Inventory Turnover and Processing Period

The inventory turnover ratio generally increased from early 2018, peaking around mid-2019, indicating more efficient inventory management during that period. However, it declined substantially through 2020 before resuming a strong upward trend in 2021 and into mid-2022. Correspondingly, the average inventory processing period decreased from 8 days to 5 days by mid-2019, experienced a slight increase in 2020, and then returned to 5 days by mid-2022, reflecting improved inventory turnover efficiency over the medium term.

Receivables Turnover and Collection Period

Receivables turnover ratios fluctuated moderately, with a rise observed in 2020, reaching a peak in the first half of that year, suggesting faster collection during that period. However, beginning in 2021, the turnover ratio declined again, indicating slightly slower collections. The average receivable collection period mirrored this trend, shortening notably in 2020 but increasing in 2021 and early 2022, which may indicate some recovery challenges or more lenient credit terms extended to customers.

Payables Turnover and Payment Period

The payables turnover ratio increased from early 2018 through mid-2020, indicating faster payments to suppliers, with the ratio peaking in mid-2020. Subsequently, it became more variable but generally remained around a moderate level through mid-2022. The average payables payment period showed the reverse pattern, decreasing significantly during 2020 and then stabilizing around 70 to 80 days, reflecting balanced payment terms and working capital management.

Working Capital Turnover

This ratio exhibited considerable volatility, with an extraordinary spike in mid-2019 and again in early 2022. These significant surges suggest periods of abrupt changes in working capital efficiency, potentially from operational shifts or changes in asset and liability management during those quarters. However, gaps and fluctuations indicate inconsistency in the working capital cycle over the timeframe.

Operating Cycle

The operating cycle displayed a decreasing trend until early 2020, indicating improved efficiency in managing inventory and receivables together. In 2020, the cycle lengthened sharply, peaking at 112 days by the end of that year, before declining in the subsequent quarters. This lengthening corresponds with longer receivables collection and inventory processing periods during that period, likely impacted by external market conditions.

Cash Conversion Cycle

The cash conversion cycle primarily remained negative or close to zero until 2019, suggesting that payables were being managed to delay cash outflows beyond the collection of receivables and inventory turnover, which is favorable for cash flow. However, it turned positive in 2021, peaking at 14 days, indicating a temporary deterioration in the liquidity cycle. This positive cash conversion cycle then trended downward toward positive low single digits by mid-2022, signaling some improvements in cash flow timing.

Overall, the data indicate phases of enhanced operational efficiency interspersed with periods of strain, especially during 2020 and parts of 2021, likely reflecting response to external economic pressures. Inventory and payables management appear robust with signs of recovery in receivables and working capital metrics towards mid-2022.

Revenues from contracts with customers

Revenues displayed a fluctuating pattern over the analyzed periods. Initial quarters in 2018 showed relatively stable revenues around the 1500 million US dollar mark. A decline is identifiable starting in early 2019 through early 2020, reaching a notable low in the second quarter of 2020 coinciding with 490 million US dollars. Subsequent quarters indicate a recovery trend, with revenues increasing steadily from the third quarter of 2020 through mid-2022, ultimately surpassing previous levels and reaching 2168 million US dollars by the second quarter of 2022.

Inventories

Inventory levels remained relatively stable throughout the periods, ranging mostly between 70 and 110 million US dollars. Some minor fluctuations are evident, with higher inventory levels in early 2018 and a slight decrease through 2019. Inventory values held steady around the mid-70 million range between 2020 and 2021, with a modest increase to 93 million US dollars by the second quarter of 2022.

Inventory turnover

Inventory turnover ratio exhibited a general upward trend from 2018 through 2019, peaking at over 76 in mid-2019, indicating increased efficiency in inventory management or faster inventory cycles. Thereafter, turnover ratios declined sharply in 2020 to around 40, coinciding with the period of lower revenue and market pressures. Starting in 2021, the ratio improved substantially, surging past previous highs to approximately 79 by the first half of 2022, signaling improved inventory utilization and operational efficiency.

Summary

The data suggest that the company experienced significant revenue volatility, with a marked downturn in early 2020 likely reflecting external challenges. Inventory levels remained comparatively stable, while inventory turnover fluctuated notably, declining during the low-revenue period and subsequently improving alongside revenue recovery. The rising inventory turnover in tandem with increasing revenues in 2021 and 2022 indicates enhanced operational efficiency and possibly optimized inventory management practices.

Revenue Trends

Revenues show a cyclic seasonal pattern with notable fluctuations across quarters. From early 2018 through 2019, revenues generally declined from around 1,500 million USD to just above 1,200 million USD, indicating a downward trend in that period. A sharp decrease is evident in 2020, with revenues dropping significantly during the first half of the year, hitting a low point at 490 million USD in Q2 2020, likely reflecting external economic or market disruptions. Subsequently, revenues steadily recover through late 2020 and into 2022, culminating in a strong increase to over 2,100 million USD by mid-2022. This recovery and growth indicate improved market conditions or operational performance.

Receivables, Net

Net receivables followed a generally increasing trend from 2018 through 2022, starting near 1,100 million USD and rising consistently over the period. Despite a modest dip in the middle of 2020 coinciding with the revenue trough, receivables quickly rebounded and continued to increase, reaching over 1,500 million USD in mid-2022. The growth in receivables suggests an expansion in credit extended to customers, possibly reflecting higher sales volumes or changes in credit terms.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated considerably across the quarters. Higher ratios were observed in early 2020, peaking at 6.95 in Q1 2020, suggesting more efficient collection of receivables at that time, likely related to the reduced sales volume. After this peak, the ratio declined through 2021, dropping to as low as 3.53 in Q1 2021, indicating slower collection efficiency during the revenue recovery phase. The ratio gradually improved afterward, reaching around 4.7 by mid-2022 but remaining below earlier levels. Overall, the turnover ratio indicates variability in collection efficiency, with a tendency towards slower receivables turnover correlating with increased receivables and rising revenues in recent periods.

Summary Insights

The data reflects a significant impact on revenues and operations during 2020, followed by a robust recovery and growth phase through 2021 and 2022. Increasing net receivables alongside recovering and growing revenues suggest expanding credit sales, while the declining receivables turnover ratio in recovery periods may point to less efficient collections. These trends collectively indicate that while financial performance improved markedly after 2020 disruptions, there may be emerging credit management considerations to monitor.

The analysis of the quarterly financial data reveals notable fluctuations and trends in key financial metrics over the examined period.

Revenues from Contracts with Customers

Revenues exhibit a cyclical pattern with an overall increasing trajectory from early 2018 through mid-2022. Initial quarters of 2018 display relatively stable revenues around 1,400 to 1,500 million USD. A decline begins in early 2019, reaching a low point amid the first quarter of 2020 with revenues approximately 1,024 million USD. This is followed by a significant drop in the second quarter of 2020, coinciding with 490 million USD, likely indicating an external disruption or downturn during that period. After that, the company enters a recovery phase with a steady uptrend in revenue, culminating in approximately 2,168 million USD by mid-2022, signifying robust growth and recovery in business operations.

Accounts Payable

The accounts payable figures closely mirror the fluctuations in revenue, suggesting alignment between operational expenses and revenues. Starting around 1,335 million USD in early 2018, the payables increase through mid-2018, peaking near 1,479 million USD in the third quarter of 2018, before gradually decreasing into 2019 and reaching a low point in the second quarter of 2020 at 696 million USD. Following this trough, there is a clear upward trend in accounts payable, rising progressively above 1,500 million USD by mid-2022, reflecting increased procurement or operational activity consistent with the revenue increase.

Payables Turnover Ratio

The payables turnover ratio shows variability throughout the periods, oscillating mostly between 3.5 and 5.7. Higher ratio values, such as 5.74 in the second quarter of 2020, suggest faster payment of payables during periods of reduced overall expenditure. Conversely, lower ratios in certain quarters (around 3.5 in early 2021) may indicate slower payment cycles. The ratio does not show a consistent directional trend but fluctuates with business activity levels, reflecting changes in working capital management and supplier payment practices in response to operational requirements.

In summary, the data portray a company experiencing periodic revenue and expenditure volatility, with marked impacts around early 2020, followed by a recovery and growth phase extending into 2022. The synchronization between revenues and accounts payable along with fluctuating payables turnover ratios highlights dynamic financial and operational management adapting to external and internal business conditions.

Working Capital

The company's working capital exhibits significant fluctuations over the examined quarters. It started with a generally stable range between approximately 900 and 1100 million USD through 2018 and early 2019, followed by a marked decline mid-2019 reaching a low of 141 million USD in September 2019. Subsequently, minor recoveries occurred toward late 2019. The year 2020 maintained relatively low but somewhat stable levels below 500 million USD, with volatility evident. During 2021, working capital reached negative territory in the first quarter but rebounded to a modest positive level by year-end. In early 2022, the working capital shows a further gradual increase, reaching over 400 million USD by mid-2022. This pattern indicates periods of tightening liquidity and operational challenges, particularly in mid to late 2019 and early 2021, followed by cautious recovery phases.

Revenues

Revenue trends display substantial variation across the periods. The initial quarters of 2018 show relatively stable revenues slightly above 1400 to 1500 million USD. A declining trend begins in early 2019, reaching a low point of 1024 million USD in March 2020, coinciding with the global economic impact of the COVID-19 pandemic. During the pandemic quarters (Q2 and Q3 2020), revenues dropped sharply to their lowest values in the dataset but started to recover towards the end of 2020. From 2021 onward, there is a strong upward trend in revenues, increasing consistently each quarter and culminating in robust growth reaching over 2100 million USD by mid-2022. This recovery and growth phase suggests an improving business environment and possibly higher commodity prices or volumes sold.

Working Capital Turnover Ratio

The working capital turnover ratio shows considerable volatility and sharp spikes throughout the periods. Initially, the turnover ratio fluctuates moderately between approximately 5 and 6.5 in 2018 and early 2019, indicating a steady efficiency in using working capital to generate revenues. However, mid to late 2019 experiences extreme spikes in the turnover ratio, with values escalating dramatically up to nearly 37, reflecting a stark drop in working capital combined with relatively high revenue levels. The ratio then decreases and stabilizes somewhat in 2020, with values mostly ranging from about 7.8 to nearly 12, signaling somewhat normalized operational efficiency despite lower revenues and working capital. In 2021, the data is inconsistent with some missing values, but notable spikes reappear in early 2022, with turnover ratios climbing above 29 before moderating slightly. Overall, these fluctuations suggest periods of working capital constraints which forced more intensive usage of available funds to sustain revenue generation, as well as the effects of significant operational and market challenges in recent years.

Summary Insights

The analysis reveals a period of operational and financial turbulence, with working capital and revenues both impacted by external and internal factors. The sharp decline in working capital in mid-2019 and early 2021, combined with the revenue volatility due to market disruptions including the pandemic, indicates periods of cash flow pressure and possible liquidity risks. Recovery is evident from late 2020 onwards, with improving revenues and working capital normalization contributing to enhanced turnover ratios. The data reflects a company adapting to fluctuating market conditions, with a clearer recovery trajectory in 2021 and the first half of 2022. The management's efforts to improve working capital efficiency and revenue generation appear to be yielding positive results as evidenced by upward trends in key metrics after a challenging period.

Inventory Turnover

The inventory turnover ratio exhibited a generally upward trend from 2018 through mid-2019, increasing from approximately 45 to over 76. This indicates an improvement in the efficiency of inventory management during this period. However, a noticeable decline occurred starting in late 2019 through 2020, dropping to around 40 by the end of 2020. This decline suggests a slowdown in inventory turnover, potentially indicative of reduced sales or slower inventory movement amid challenging conditions.

From early 2021 onward, the ratio rebounded strongly, climbing back above 70 by the end of 2021 and reaching highs close to 79 by early 2022. Despite a slight dip in mid-2022, the turnover ratio remained elevated compared to the 2020 lows, reflecting a recovery and renewed efficiency in inventory utilization.

Average Inventory Processing Period

The average inventory processing period, expressed in days, showed an inverse relationship with the inventory turnover ratio, as expected. In 2018, the processing period shortened from about 8 days to 5 days by mid-2019, signaling faster inventory conversion consistent with the increased turnover.

A reversal took place beginning in late 2019 and throughout 2020, where the processing period extended from 5 days to approximately 9 days, aligning with the decreased turnover ratio. This elongation indicates slower inventory processing and potentially higher inventory holding periods during this time.

In 2021 and into mid-2022, the processing period shortened again to around 5 days, confirming improved inventory management and faster inventory cycling coinciding with the recovery in turnover ratio.

Overall Analysis

The data demonstrates clear seasonal and cyclical patterns influenced by broader market conditions. There was a pronounced peak in inventory efficiency metrics in 2019, followed by a downturn in 2020—possibly linked to external disruptions affecting business operations. The subsequent recovery in 2021 and early 2022 suggests adaptation to market conditions and enhanced inventory control practices. The inverse correlation between inventory turnover and inventory processing days remains consistent throughout the periods analyzed.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates fluctuations over the observed periods. Initially, it hovered around 4.3 to 5.5 between early 2018 and late 2019, indicating moderate efficiency in collecting receivables. A notable increase occurred in 2020, peaking at 6.95 in the first quarter, which suggests an improvement in collection processes or faster cash conversion during that period. However, following this peak, the ratio declined steadily through 2020 and early 2021, reaching a low of 3.53 in the first quarter of 2021. Subsequently, there was a gradual recovery with the ratio rising to approximately 4.7 by mid-2022, though it did not return to the earlier higher levels seen in early 2020.

Average Receivable Collection Period (Days)

The average collection period inversely reflects the trends in receivables turnover. Initially, the collection period decreased from 82 days to 67 days by the end of 2018, indicating faster receivable collections. The period then increased gradually during 2019, peaking near 81 days, before a sharp decline in early 2020, aligning with the peak in turnover ratio, and reaching a low of 53 days. This signals a significantly accelerated collection rate during that time. However, the collection period lengthened again throughout 2020 and early 2021, reaching a peak of 103 days in the first quarter of 2021, suggesting slower collections and potential liquidity challenges. From there, it improved moderately, declining to 78 days by mid-2022, yet remaining higher compared to the most efficient periods observed.

Overall Insights

The data signifies periods of varying efficiency in managing receivables. The marked improvement in turnover and shortening collection period during early 2020 indicates enhanced cash flow management or changes in credit policy, possibly influenced by external conditions. Conversely, the deterioration in these metrics during late 2020 and early 2021 highlights challenges in receivable collections, potentially reflecting operational or market difficulties. The partial recovery seen through 2021 and into mid-2022 suggests some stabilization but not a full return to prior efficiency levels. Continuous monitoring of these trends is advisable for managing working capital effectively.

The analysis of the quarterly financial data reveals distinct trends in the company's inventory management, receivables collection, and overall operating cycle over the observed periods.

Average Inventory Processing Period

The average inventory processing period demonstrated a clear downward trend from early 2018 through the end of 2019, declining from 8 days to 5 days, indicating improved efficiency in inventory turnover. However, during 2020, this period increased progressively, reaching 9 days by the end of the year. In 2021, the period showed a gradual reduction again, decreasing back to 5 days by mid-2022. This pattern suggests initial operational efficiency gains followed by some challenges or strategic changes in 2020, and subsequent operational adjustments leading to improved inventory handling.

Average Receivable Collection Period

The receivable collection period remained relatively stable around 80 days throughout 2018 and 2019, with fluctuations between 67 and 85 days. A significant decrease was observed early in 2020, dropping to as low as 53 days in March 2020, possibly reflecting more stringent credit policies or accelerated collections. However, later in 2020, the period increased sharply, peaking at 88 days at year-end. In 2021, this metric escalated further, reaching a high of 103 days in the first quarter, before gradually declining but remaining elevated relative to earlier periods through mid-2022. This volatility suggests challenges in receivables management during and after 2020, potentially reflecting external economic factors impacting customer payments.

Operating Cycle

The operating cycle mirrored the movements in the inventory processing and receivables collection periods. It decreased notably from 90 days in Q1 2018 to 73 days by the end of 2018, indicating improved overall operational efficiency. In 2019, it increased slightly to 86 days by year-end but dropped sharply to a low of 59 days in early 2020. The cycle then expanded substantially through 2020 and 2021, peaking at 112 days in Q1 2021, which aligns with the extended receivable collection period during this time. As of mid-2022, the operating cycle showed signs of improvement, declining to 83 days, yet it remained higher than pre-2020 levels, suggesting the company is in the process of recovering operational efficiency but has not yet fully returned to prior norms.

Overall, the data indicates periods of operational efficiency gains up until 2019, followed by significant disruptions and increased working capital cycle durations during 2020 and 2021. Signs of recovery are evident by mid-2022, although receivables collections and operating cycle durations continue to be higher compared to earlier years, highlighting ongoing challenges in cash flow management.

Payables Turnover Ratio

The payables turnover ratio exhibits fluctuations over the analyzed quarterly periods. Starting from a value of 3.69, the ratio generally increased until reaching a peak of 4.47 in the final quarter of 2018. Following this peak, the ratio experienced moderate volatility through 2019 and 2020, hitting a significant high of 5.74 in the second quarter of 2020. After this peak, there was a decline to 3.7 in the final quarter of 2020. From 2021 onwards, the ratio showed a recovery and subsequent steady improvement, culminating near 5.05 by the end of 2021 and slightly decreasing to 4.66 by mid-2022. This pattern suggests periods of faster payment cycles interspersed with intervals of slower turnover.

Average Payables Payment Period (Days)

The average payables payment period in days demonstrates an inverse relationship to the payables turnover ratio as expected. The period decreases from 99 days at the beginning of 2018 to a low of 82 days by the end of that year, implying quicker payments. However, throughout 2019, the number of days oscillated between approximately 86 and 96 days, indicating some variability in payment duration. A notable reduction to 64 days occurred in the second quarter of 2020—coinciding with the peak in payables turnover—suggesting an accelerated payment schedule. This was followed by a return to longer payment periods reaching 99 days by the final quarter of 2020. Throughout 2021 and into mid-2022, the payment period decreased again, stabilizing around the mid-70s in days. This trend indicates cycles of cash management adjustments, balancing between extending and shortening payment durations.

Overall Trends and Insights

The data reflects a cyclical pattern in the management of payables. Periods of higher turnover ratios align with shorter average payment periods, indicating intervals of accelerated supplier payments possibly tied to strategic liquidity management or operational demands. Conversely, elevated average payment periods correspond with lower turnover ratios, suggestive of extended credit terms or deliberate cash flow conservation. The notable fluctuations during 2020 may be attributed to external economic conditions, prompting changes in payment behavior. From 2021 onward, the stabilization of both ratios and payment periods points to a more consistent approach in payables management.

Average Inventory Processing Period

The average inventory processing period demonstrated a gradual decline from 8 days in early 2018 to 5 days by mid-2019, maintaining this lower turnover rate through mid-2022. The period briefly extended to 6-9 days during the second half of 2020 but reverted to 5 days in the following years, indicating an overall improvement in inventory management efficiency over the analyzed timeframe.

Average Receivable Collection Period

This metric showed notable volatility across the periods. Initially fluctuating between 67 and 85 days from 2018 to early 2019, it then declined sharply to as low as 53-57 days during Q1 to Q2 2020, suggesting improved receivables collection during that period. However, the period subsequently increased, peaking at 103 days in early 2021, then gradually decreasing to 78 days by mid-2022. The overall trend indicates intermittent challenges in cash collection, with a significant spike in early 2021.

Average Payables Payment Period

The payables payment period decreased significantly from approximately 99 days in early 2018 to roughly 82 days by early 2020, reflecting a tightening in payment terms or faster supplier payments. This was followed by a sharp decline to 64 days in mid-2020, possibly indicating an effort to preserve supplier relationships or respond to external pressures. Subsequently, the period re-extended to over 100 days by early 2021 before tapering off to about 77-78 days by mid-2022. This pattern reflects fluctuating management of payables, with periods of extended and shortened payment cycles.

Cash Conversion Cycle

The cash conversion cycle was generally negative or low positive throughout the timeline, indicating an efficient conversion of inputs into cash. From 2018 through early 2019, the cycle ranged from approximately -9 to -12 days, suggesting cash was collected before payments were due. In the second half of 2020, data irregularities and a shift to positive values up to 9 days were observed, followed by an increase to 14 days in early 2021. Subsequently, it fluctuated between 5 and 13 days through mid-2022. This indicates a temporary deterioration in operational liquidity efficiency around 2020-2021 but partial recovery thereafter.