Marathon Oil Corp. (NYSE:MRO)

The data reveals several noteworthy trends in operational efficiency and cash management over the analyzed periods.

Inventory Turnover

Inventory turnover shows a general upward trend from 2017 to mid-2019, increasing significantly from about 34.71 to a peak of 79.29 by September 2021. After reaching this peak, it slightly declined yet remained relatively high, indicating improved inventory management and faster stock movement over time.

Receivables Turnover

Receivables turnover gradually improved initially, peaking at 6.95 in the second quarter of 2020, which suggests faster collection of receivables. However, from late 2020 onwards, it declined, fluctuating in the range of approximately 3.5 to 4.9, indicating a slowdown in collections.

Payables Turnover

Payables turnover generally increased from 3.13 in early 2017 to higher levels around 5 by 2021, with some fluctuations. This suggests the company tended to pay its suppliers more quickly over time, particularly noticeable in mid-2020, which saw a sharp spike to 5.74 before moderating.

Working Capital Turnover

The working capital turnover ratio exhibited considerable volatility. It spiked notably in late 2018 at 36.95 and again in early 2022 (above 29), reflecting periods of exceptionally efficient use of working capital. Conversely, there were intervals of lower turnover, such as mid-2018 and most of 2020, implying varying efficiency in utilizing short-term capital during these quarters.

Average Inventory Processing Period

The inventory processing period decreased steadily from 11 days in early 2017 to about 5 days in late 2019, indicating faster inventory turnover. Subsequently, there was a slight increase reaching 9 days during 2020, but it improved again to around 5-6 days through 2022.

Average Receivable Collection Period

This metric decreased from approximately 90 days in early 2017 to a low of 53 days in the second quarter of 2020, reflecting accelerated receivables collection. However, it increased again to over 100 days in late 2020 and stabilized around 75-85 days in 2021-2022, indicating slower collection periods compared to the mid-2020 low.

Operating Cycle

The operating cycle duration diminished from around 101 days in 2017 to lows near 59 days in early 2020, showing improved overall efficiency in converting inventory and receivables into cash. Afterward, it lengthened substantially to approximately 112 days by early 2021 before declining to below 90 days through mid-2022.

Average Payables Payment Period

The payables payment period steadily contracted from 116 days in 2017 to approximately 82 days by early 2018, followed by some fluctuations. It dropped notably to 64 days mid-2020, then increased again to over 100 days at the end of 2020, suggesting variability in the company's payment strategies.

Cash Conversion Cycle

The cash conversion cycle remained negative or near zero for most periods until 2020, indicating efficient cash management with quick turnover of working capital components. However, it transitioned to positive values from late 2020 through 2022, peaking at 14 days, suggesting a lengthening of the time between cash outflows and inflows.

Overall, the company demonstrated improved operational efficiency in inventory and receivables management up to 2019, followed by increased variability and some erosion of efficiency around 2020. Trends in payables payment and working capital turnover indicate shifting strategies in managing supplier payments and capital. The lengthening cash conversion cycle in recent periods may highlight emerging liquidity management challenges.

Revenue Trends

The quarterly revenues exhibited a generally fluctuating but upward trend over the examined periods. Starting at $988 million in March 2017, revenues increased gradually through 2017 and 2018, reaching a peak of approximately $1,538 million in September 2018. Thereafter, revenue showed some volatility, with a notable decline in early 2020 to $490 million, likely reflecting adverse external factors. Following this drop, revenue recovered steadily, reaching a new high of approximately $2,168 million by June 2022. This pattern indicates resilience and recovery after a significant downturn.

Inventory Levels

Inventories demonstrated a gradual decline from $145 million in March 2017 to approximately $72 million by the end of 2019. Inventory levels remained relatively stable through 2020 and 2021, fluctuating slightly around the mid-70 million range. A modest increase was observed in June 2022, where inventories rose to $93 million. Overall, the inventory levels decreased evidently in the early period and then stabilized with minor variations. This suggests improved inventory management or changes in operational scale over time.

Inventory Turnover

Inventory turnover ratios, available from March 2018 onward, exhibited an increasing trajectory initially, rising from 34.71 to a peak of 79.29 by September 2021. This upward trend indicates enhanced efficiency in managing stock relative to sales, with more rapid turnover reflecting better inventory utilization. However, a slight decrease in turnover ratio occurred in June 2022, down to 76.33, which may signal a moderation in sales velocity or an increase in stock levels. The overall high turnover ratios suggest effective inventory control and strong sales performance relative to inventory holdings throughout most of the examined period.

Overall Analysis

The financial performance reflected by revenues and inventory metrics shows a company that, despite experiencing a significant revenue decline in early 2020, managed to stabilize and improve its efficiency in inventory management. The recovery in revenue post-2020 and the consistently high inventory turnover ratios indicate operational resiliency and an ability to adapt to changing market conditions. The stabilization of inventory levels further supports the view of optimized supply chain and inventory policies during periods of fluctuating demand.

Revenue Trends

Revenue figures display a generally increasing trajectory from early 2017 through mid-2022 with notable fluctuations. Initial quarterly revenues rise from $988 million in March 2017 to a peak of $1,537 million by March 2018. Following this, there is a decline during the remainder of 2018 and fluctuating values through 2019. A sharp downturn occurs in 2020, correlating with global economic challenges, where revenues hit a low of $490 million in June 2020. Recovery ensues throughout late 2020 and continues strongly into 2021 and 2022, culminating in a substantial increase to $2,168 million by June 2022, the highest value in the dataset.

Receivables, Net

Net receivables show an increasing trend from the start of the period, beginning at $751 million in March 2017 and peaking at $1,512 million by June 2022. There is pronounced growth during 2017 and 2018, with a mild decrease toward the end of 2018. In 2019, receivables stabilize in the range of $1,086 million to $1,148 million. A significant dip is noticeable in 2020, particularly in the second quarter ($620 million), paralleling the revenue decline during the same period. The subsequent quarters exhibit steady recovery and continued upward movement, reflecting increased sales volume or changes in credit terms.

Receivables Turnover Ratio

The receivables turnover ratio fluctuates across the quarters, indicating changes in the efficiency of collecting receivables. Early data from late 2017 to 2019 show a range mostly between approximately 4.0 and 5.5 times. There is a notable spike to 6.95 in March 2020, suggesting an improvement in collection efficiency amid declining revenues. This ratio then declines through 2020 and 2021, dipping below 4.0 at times, which signals a slower collection period despite recovering revenues. The latter part of 2021 and into mid-2022 sees a moderate increase in turnover, reaching 4.7 by June 2022, indicating gradual improvement but not yet returning to earlier efficiency levels.

Summary Insight

The data indicate that while revenues and receivables generally trend upward over the observed timeframe, the pandemic-related disruptions in 2020 are starkly reflected in both reduced revenues and net receivables. The company demonstrates resilience with gradual recovery in both metrics post-2020. However, the efficiency of receivables collection as measured by the turnover ratio shows volatility, with peak efficiency during early 2020 followed by a decline during recovery phases. This suggests areas for potential focus on credit and collection policies to maintain consistent cash flow alongside growing revenues.

Revenue Trends

Revenues from contracts with customers demonstrated a general upward trajectory over the analyzed periods. Starting at $988 million in the first quarter of 2017, revenues increased substantially, peaking initially around $1.5 billion in early 2018. A downturn occurred during 2020, reflecting a notable decline with the lowest point at $490 million in the second quarter of 2020. This decline was followed by a recovery phase, with revenues steadily increasing through 2021 and into mid-2022, reaching the highest value of $2.168 billion by the second quarter of 2022.

Accounts Payable Movement

Accounts payable values closely mirrored the revenue pattern, increasing from $1.081 billion in the first quarter of 2017 to a peak near $1.479 billion in the third quarter of 2018 before exhibiting a downward trend into 2020, with the lowest value observed at $696 million in the second quarter of 2020. Subsequently, accounts payable rose consistently, ending at $1.523 billion by mid-2022. This suggests increasing operational liabilities in line with the revenue recovery post-2020.

Payables Turnover Analysis

The payables turnover ratio exhibited fluctuations without a clear sustained trend. Ratios were generally in the range of approximately 3.1 to 5.7 times across the periods measured, reflecting variations in the frequency of accounts payable payments relative to purchases. Notably, there was a peak ratio of 5.74 in the second quarter of 2020, coinciding with the period of lowest revenues and payables, possibly indicating more rapid payment cycles or lower outstanding payables during this stress period. Post-2020 ratios stabilized around 4.5 to 5.0, suggesting normalized or slightly accelerated payment processes amid operational recovery.

Overall Insights

The data reveals a significant impact on operational scale during 2020, likely driven by external market challenges, with marked decreases in both revenues and accounts payable. Recovery through 2021 and 2022 is evident, characterized by growing revenues surpassing prior peaks and increasing accounts payable balances consistent with higher business activity. Payables turnover ratios indicate adaptive payment strategies, with faster turnover during the downturn and stabilization as conditions improved.

Working Capital

The working capital fluctuated notably across the periods observed. Initially, there was a substantial rise from 644 million USD in March 2017 to a peak of 2,342 million USD in June 2017, followed by a decline to 598 million USD by December 2017. Subsequent quarters showed moderate variability, remaining generally in the range of a few hundred million USD, with occasional increases and decreases. In 2020, working capital values were relatively lower compared to prior years, reflecting a dip in the middle of the year but starting to recover towards the end of 2020 and into 2021. However, in the first quarter of 2022, working capital turned slightly negative (-21 million USD), before recovering again in the following quarters.

Revenues

Revenues displayed an overall increasing trend across the periods, despite some volatility. Starting at 988 million USD in March 2017, revenues rose steadily to reach values above 1,500 million USD by early 2018. A dip was observed in the second quarter of 2020, likely reflecting external market impacts, with revenues decreasing to 490 million USD. Following this trough, revenues recovered progressively in late 2020 and continued to increase through 2021 and into 2022, reaching a high of 2,168 million USD by June 2022. This upward movement suggests strengthening sales or operational performance over time.

Working Capital Turnover Ratio

The working capital turnover ratio exhibited significant variations and some erratic values, likely due to irregular or missing data early in the series. Starting from recorded values around 7 in early 2018, the ratio increased sharply in mid to late 2019, reaching exceptionally high levels such as 36.95 before declining again. These elevated turnovers imply a higher efficiency in using working capital to generate revenues during those periods. From early 2020 onwards, the turnover ratio generally exhibited a downward trend with fluctuations but maintained relatively high levels compared to the earlier periods, indicating improved capital management efficiency in more recent quarters. Certain quarters in 2022 showed renewed increases in the ratio, suggesting ongoing efficient usage of working capital.

Overall Analysis

The data reveals fluctuating working capital balancing levels of investment and liquidity management, with occasional periods of working capital stress as indicated by negative values or low amounts. Revenues demonstrate resilience and growth over the medium term, recovering from the sharp declines observed during 2020. The working capital turnover ratio reflects varying operational efficiencies, with some periods of exceptionally high ratios indicative of stronger capital utilization. Together, these metrics suggest a dynamic financial position marked by adaptive management of capital resources aligned with fluctuating market conditions and revenue growth.

Inventory Turnover Ratio

The inventory turnover ratio shows a generally increasing trend from early 2017 through mid-2019, rising from around 34.71 to a peak of 76.38. Following this peak, there is a gradual decline in the ratio throughout 2020, reaching a low of 40.75 by the end of that year. From early 2021 onwards, the ratio again exhibits an upward trend, rising steadily to reach 79.29 by September 2022, before a slight decrease to 76.33 in the last available quarter. This overall progression indicates improved efficiency in inventory management over the period, with some fluctuations corresponding possibly to external or operational factors around 2020.

Average Inventory Processing Period (Number of Days)

The average inventory processing period inversely mirrors the turnover ratio, decreasing from 11 days in early 2017 to just 5 days by mid-2019, indicating faster inventory turnover. There is a slight increase during 2020, peaking at 9 days by the end of the year, coinciding with the decline in turnover ratio. From 2021 onwards, the number of days declines again, stabilizing at around 5 days by mid-2022. This pattern suggests that the company was able to reduce the time inventory remained on hand over the longer term, despite temporary setbacks likely related to market or supply disruptions.

Receivables Turnover

The receivables turnover ratio initially increased from 4.04 in the first quarter of 2018 to a peak of 6.95 in the second quarter of 2020, indicating an improvement in the efficiency of collecting receivables during this period. However, after this peak, the ratio declined steadily, reaching a low of 3.53 in the second quarter of 2021, reflecting a slowdown in collection efficiency. Subsequently, a mild recovery occurred, with the ratio climbing back to approximately 4.7 by mid-2022.

Average Receivable Collection Period

This metric, representing the average number of days to collect receivables, mirrored the inverse trend of receivables turnover. Beginning at 90 days in early 2018, the collection period shortened progressively, reaching a low of 53 days in the second quarter of 2020. This indicates improved collection effectiveness during that time. Following this trough, the collection period lengthened significantly, peaking at 103 days in the second quarter of 2021, signaling challenges in receivables collection. The period then gradually shortened again to 78 days by June 2022.

Overall Insights

The data suggests a phase of enhanced receivables management from 2018 through mid-2020, evidenced by increasing turnover and decreasing collection days. This was followed by a period of reduced efficiency and longer collection times through mid-2021, after which some recovery in both ratios is apparent. The fluctuations may indicate responses to changing business conditions, credit policies, or external economic factors affecting the company’s ability to collect receivables.

Inventory Processing Period

The average inventory processing period exhibits a generally decreasing trend from March 31, 2018, to March 31, 2019, dropping from 11 days to 5 days. This suggests an improvement in inventory management efficiency during this interval. Following this, the period remains relatively stable around 5 to 6 days until June 30, 2020, after which it gradually increases, peaking at 9 days by December 31, 2020. Subsequently, the period decreases again and stabilizes near 5 days by mid-2022, indicating fluctuations in inventory turnover efficiency over time with a trend towards improvement in the latter periods.

Receivable Collection Period

The average receivable collection period shows notable variability throughout the quarters. Initially, between March 31, 2018, and December 31, 2019, the period fluctuates moderately between 53 and 90 days, with a marked decrease observed around March 31, 2020, reaching a low of 53 days. However, from June 30, 2020, onwards, there is a discernible upward trend, peaking at 103 days by June 30, 2021, which could indicate challenges in collecting accounts receivable promptly. Towards mid-2022, the collection period reduces again to 78 days, suggesting an improvement but still elevated compared to earlier years.

Operating Cycle

The operating cycle follows a pattern similar to the receivable collection period. It decreases from 101 days at March 31, 2018, to a low of 59 days by March 31, 2020, reflecting enhanced overall operational efficiency during this period. Post this trough, the cycle lengthens significantly to 112 days by June 30, 2021, indicating a slowdown in the combined inventory and receivables processes. After this peak, the operating cycle shortens steadily, reaching 83 days by June 30, 2022, which suggests gradual improvements but not to the pre-2020 shorter cycle durations.

The payables turnover ratio exhibits a generally upward trend from the first reported quarter in March 31, 2017, through mid-2022, indicating an improvement in the frequency with which the company settles its accounts payable within a year. Starting around a ratio of 3.13 in early 2017, the ratio increases steadily, reaching peaks above 5.0 in certain quarters of 2020 and 2022. This pattern suggests an enhanced efficiency in managing payables over the period observed.

Correspondingly, the average payables payment period, measured in days, shows a declining trend over the same timeframe. Beginning with an average payment period close to 116 days, the duration decreases notably to the mid-70s range by 2022. This decline aligns with the increasing payables turnover ratio, as a shorter duration to settle payables typically results in a higher turnover ratio.

There are fluctuations within the data, such as a temporary lengthening of the payment period in late 2017 and mid-2021, where the payment days increased to near or above 99 days. However, these instances are followed by subsequent reductions, implying a possible focus on tightening payment cycles during those times.

Overall, the trends reflect a move toward more efficient payables management, characterized by quicker payment cycles and a higher turnover rate. This shift may contribute positively to supplier relations and working capital management, as the company appears to be accelerating its payments over the observed periods without extreme volatility.

The analysis of the quarterly financial data reveals several notable trends in the company's working capital management metrics over the observed periods.

Average Inventory Processing Period

The inventory processing period demonstrates a gradual decline from 11 days in early 2018 to 5 days by mid-2019, indicating improved efficiency in inventory turnover. This period slightly increased again towards the end of 2020, peaking at 9 days, before returning to 5 days by mid-2022. Overall, the trend reflects efforts to streamline inventory management with occasional short-term fluctuations.

Average Receivable Collection Period

The receivable collection period fluctuates throughout the timeframe, starting around 90 days in early 2018, declining to a low of 53 days in early 2020, which signifies faster collection of receivables. However, post-2020, the period sharply increases, reaching a peak of 103 days by mid-2021, before gradually declining again towards mid-2022 to approximately 78 days. These variations suggest changes in credit policies or customer payment behavior, potentially impacting cash inflows.

Average Payables Payment Period

The payables payment period shows a declining trend from 116 days at the beginning of 2018 to around 72 days by early 2022, with some volatility in between. Notably, there was a marked reduction from 94 days in early 2019 to 64 days in mid-2020, followed by an increase peaking at 103 days in late 2020, then dropping again. This pattern may reflect strategic adjustments in negotiating payment terms with suppliers or managing cash outflows amid changing economic conditions.

Cash Conversion Cycle

The cash conversion cycle (CCC) exhibits negative values initially from 2018 through early 2020, bottoming out at -23 days, indicating a strong liquidity position whereby payables are delayed longer than the sum of inventory and receivables periods. However, starting in 2021, the CCC turns positive, peaking at 14 days in late 2021 before improving slightly to 5 days by mid-2022. The shift from negative to positive CCC suggests a tightening in working capital, possibly due to extended receivable collection or reduced payment terms with suppliers.

In summary, the company has generally enhanced its inventory management efficiency while experiencing volatility in receivables and payables periods. These changes have influenced the overall liquidity position as reflected in the cash conversion cycle's transition from negative to positive, implying that working capital management has faced challenges in more recent periods. Monitoring and optimizing these components will be critical for sustaining operational cash flow and financial stability.