Phillips 66 (NYSE:PSX)

Inventory Values Over Time

The inventory values display a generally upward trend across the observed periods from 2015 to 2019. Starting from a total of 3,477 million US dollars at the end of 2015, the values saw a decline in 2016 to 3,150 million US dollars but subsequently rose steadily, reaching 3,776 million US dollars by the end of 2019. This indicates an overall increase in resources held in inventory over the five years.

Crude Oil and Petroleum Products

Specifically focusing on crude oil and petroleum products, the values exhibited some volatility but an overall increase during the period. From 3,214 million US dollars at the end of 2015, the value decreased to 2,883 million in 2016. However, from 2017 onwards, the figures increased consistently year-over-year, culminating in 3,452 million US dollars in 2019. This suggests a recovery or buildup in crude oil and petroleum product inventories after a dip in 2016.

Materials and Supplies

The materials and supplies category shows steady growth throughout the five-year span. The inventory value started at 263 million US dollars in 2015 and increased incrementally each year to reach 324 million US dollars by the end of 2019. This consistent rise may reflect increasing procurement, stockpiling of materials, or operational scaling over time.

Summary of Trends

In summary, the overall inventory value increase driven by both crude oil and petroleum products as well as materials and supplies points to a strategic accumulation of inventory assets. The temporary decrease in 2016 across categories could represent a period of inventory optimization, sales increases, or external market factors affecting stock levels. From 2017 forward, the growth signals either increased operational activity, anticipation of higher demand, or price changes affecting recorded inventory values.

The financial data indicates several notable trends and variations over the five-year period ending December 31, 2019, when evaluating both reported and LIFO reserve adjusted figures.

Inventories

Reported inventories show moderate fluctuations, decreasing from 3477 million USD in 2015 to 3150 million USD in 2016, then generally increasing to 3776 million USD by 2019. Adjusted inventories, accounting for LIFO reserves, exhibit a stronger upward trend, rising substantially from 4777 million USD in 2015 to 8076 million USD in 2019. The adjustment highlights a significant buildup in inventory values not apparent in the reported figures, suggesting inflationary effects or changes in inventory costing methods have materially influenced the adjusted asset base.

Current Assets

Reported current assets rose from 12256 million USD in 2015 to 14395 million USD in 2019, with some variability, including a small dip in 2018. Adjusted current assets demonstrate a more pronounced increase, starting at 13556 million USD in 2015 and climbing to 18695 million USD by 2019. This pattern reflects the inventory adjustments' impact on the current asset category, reinforcing the role of inventory valuation changes on liquidity and short-term asset reporting.

Total Assets

The reported total assets grew steadily from 48580 million USD in 2015 to 58720 million USD in 2019. When adjusted for LIFO reserves, total assets increase even more noticeably, from 49880 million USD to 63020 million USD over the same period. This consistent upward trend in both reported and adjusted total assets suggests ongoing asset growth, with LIFO adjustments playing a significant role in portraying the company’s actual asset base.

Stockholders’ Equity

Reported stockholders’ equity experienced moderate changes, starting at 23100 million USD in 2015, dipping slightly in 2016 and 2018, and ending at 24910 million USD in 2019. Adjusted equity shows a more considerable increase, starting at 24400 million USD in 2015, peaking at 29385 million USD in 2017, and stabilizing near 29210 million USD in 2019. The larger adjusted equity figures imply that inventory valuation adjustments have a substantial equity effect, potentially enhancing the perceived net worth of the company over time.

Net Income Attributable to Phillips 66

Reported net income displays volatility, declining sharply from 4227 million USD in 2015 to 1555 million USD in 2016, surging to a peak of 5595 million USD in 2018, and then falling again to 3076 million USD in 2019. Adjusted net income shows a somewhat different pattern, starting lower than reported at 2527 million USD in 2015 but increasing to 6106 million USD by 2017, followed by a dip in 2018 to 4195 million USD and a partial recovery to 4476 million USD in 2019. The differences between reported and adjusted net income suggest that inventory costing methods and LIFO reserve adjustments can meaningfully influence profitability metrics, highlighting the importance of considering both perspectives for a comprehensive earnings assessment.

Current Ratio Trends

The reported current ratio shows a declining trend from 1.63 in 2015 to 1.24 in 2019, indicating a decrease in short-term liquidity. In contrast, the adjusted current ratio, which accounts for inventory LIFO reserve adjustments, remains consistently higher and shows a less pronounced decline, moving from 1.80 to 1.61 over the same period. This suggests that the inventory adjustments improve perceived liquidity.

Net Profit Margin Patterns

Reported net profit margin fluctuates, starting at 4.27% in 2015, dipping to 1.85% in 2016, rising sharply to around 5% in 2017 and 2018, and falling again to 2.87% in 2019. The adjusted net profit margin, however, presents a more stable and generally higher margin profile, ranging between 2.55% and 5.97%, suggesting that LIFO reserve adjustments reveal a smoother profitability pattern over the years.

Total Asset Turnover Observations

The reported total asset turnover ratio exhibits variability, decreasing from 2.04 in 2015 to 1.63 in 2016, recovering to 2.05 in 2018, and settling at 1.83 in 2019. Adjusted figures closely follow this trend but are consistently slightly lower, ranging from 1.53 to 1.95, reflecting a more conservative turnover measure when accounting for inventory adjustments.

Financial Leverage Considerations

Reported financial leverage shows a gradual increase, rising from 2.10 in 2015 to 2.36 in 2019, suggesting an increasing reliance on debt financing or higher asset base relative to equity. The adjusted leverage remains somewhat lower and follows a similar upward trajectory, moving from 2.04 to 2.16, indicating that the LIFO reserve adjustments slightly moderate leverage perception.

Return on Equity (ROE) Analysis

Reported ROE displays significant volatility, with a high of 22.7% in 2018 and lows such as 6.95% in 2016 and 12.35% in 2019. Adjusted ROE reflects less pronounced swings, showing a more consistent upward trend from 10.36% in 2015 to 15.32% in 2019, highlighting that inventory adjustments create a more stable and possibly more reliable measure of shareholder returns.

Return on Assets (ROA) Insights

The reported ROA follows a pattern similar to ROE, with peaks and troughs – rising to 10.3% in 2018 but dropping to 3.01% in 2016 and 5.24% in 2019. Adjusted ROA indicates a steadier performance with values ranging from 5.07% to 10.41%, illustrating the effect of inventory accounting on asset efficiency metrics and suggesting more consistent asset profitability when LIFO reserve adjustments are applied.

Overall Financial Insights

The adjusted financial metrics that include inventory LIFO reserve adjustments generally present more stable and somewhat improved measures across liquidity, profitability, efficiency, and leverage. This suggests that reported figures may be underestimating liquidity and profitability and overestimating volatility in asset utilization and returns. The data indicates an overall trend of moderate declines or volatility in reported ratios, while adjusted data imply a steadier financial position and performance over the analyzed period.

The data reveals trends in both reported and adjusted current assets and current ratios over a five-year period ending December 31, 2019. Analyzing these metrics provides insights into the company's liquidity and short-term financial position.

Current Assets (Reported)

The reported current assets showed an initial increase from 12,256 million US dollars in 2015 to 14,390 million US dollars in 2017. This was followed by a decline to 13,209 million US dollars in 2018 before rising again to 14,395 million US dollars in 2019. Overall, the reported current assets fluctuated moderately with a net increase over the period.

Current Assets (Adjusted)

The adjusted current assets, which account for LIFO reserve adjustments, indicated a more pronounced upward trend. Starting at 13,556 million US dollars in 2015, these assets increased steadily to 15,980 million in 2016 and further climbed to 18,690 million in 2017. After a dip to 16,109 million in 2018, there was a recovery to 18,695 million in 2019. The adjusted figures consistently exceeded the reported ones, highlighting the material impact of inventory adjustments on asset values.

Current Ratio (Reported)

The reported current ratio decreased from 1.63 in 2015 to 1.34 in 2016, suggesting a decline in liquidity during that year. Thereafter, it showed a moderate recovery, rising to 1.42 in 2017 and 1.48 in 2018, before dropping to its lowest point over the period at 1.24 in 2019. This pattern indicates moderate fluctuations in the company's ability to cover short-term liabilities with current assets, with a notable weakening at the end of the period.

Current Ratio (Adjusted)

The adjusted current ratio was consistently higher than the reported ratio throughout the period. It began at 1.80 in 2015 and decreased to 1.69 in 2016, then increased to 1.85 in 2017. A slight decrease to 1.80 occurred in 2018, followed by a further decline to 1.61 in 2019. Despite these variations, the adjusted ratio remained above 1.5 each year, underscoring relatively strong liquidity when accounting for LIFO reserves.

In summary, the adjusted financial data reflecting inventory LIFO reserve adjustments presents a more favorable liquidity position than the reported figures alone. Both current assets and current ratios show variability over the observed years, with a tendency toward increased asset values and relatively stable liquidity levels after adjustments. The declines noted in 2018 and 2019 may warrant further examination to understand underlying factors affecting short-term financial strength.

Net Income Trends

The reported net income attributable to the company shows notable volatility over the five-year period. It started at a high level of 4,227 million USD in 2015, dropped significantly in 2016 to 1,555 million USD, surged to a peak of 5,106 million USD in 2017, then slightly increased further in 2018 to 5,595 million USD before declining sharply to 3,076 million USD in 2019. In contrast, the adjusted net income figures, which presumably account for inventory LIFO reserve adjustments, display a more consistent upward trend from 2,527 million USD in 2015 to 4,476 million USD in 2019, notwithstanding a dip in 2018 where it dropped to 4,195 million USD from 6,106 million USD in 2017.

Profit Margin Analysis

Reported net profit margins mirror the net income trend with substantial fluctuation. They started at 4.27% in 2015, fell to 1.85% in 2016, and then increased to nearly 5% in both 2017 and 2018 years before declining again to 2.87% in 2019. The adjusted net profit margin presents a smoother pattern, rising from 2.55% in 2015 to a peak of 5.97% in 2017, falling noticeably in 2018 to 3.76%, and then improving modestly to 4.17% in 2019.

Comparative Insights

There is a clear discrepancy between reported and adjusted figures. The adjusted data generally reflects a less volatile and more stable financial performance, suggesting that inventory LIFO reserve adjustments have a material impact on reported profitability. The adjusted net income and profit margins tend to smooth out significant dips seen in reported numbers, particularly in 2016 and 2018. This indicates that inventory accounting methods and their adjustments play a critical role in the company’s apparent financial results.

Overall Patterns

Overall, the company's financial performance appears to be subject to significant swings in reported results, but the adjusted figures imply underlying operational stability with more moderate fluctuations. The data suggests that externally reported profitability may be heavily influenced by inventory accounting effects, and reliance on adjusted figures provides a clearer perspective of ongoing earnings trends over this period.

The analysis of the financial data over the five-year period reveals several notable trends in asset values and turnover ratios. Total assets, both reported and adjusted for inventory LIFO reserve, generally demonstrate an increasing trajectory from 2015 to 2019. The reported total assets increased from US$48,580 million in 2015 to US$58,720 million in 2019, indicating a growth of approximately 20.9%. The adjusted total assets similarly rose from US$49,880 million in 2015 to US$63,020 million in 2019, representing a growth of around 26.4%. The adjusted total asset figures remain consistently higher than reported assets, reflecting the impact of the LIFO reserve adjustments throughout the period.

Regarding asset turnover, both reported and adjusted ratios exhibit fluctuations rather than a steady trend. The reported total asset turnover ratio decreased from 2.04 in 2015 to a low of 1.63 in 2016, then improved to 1.88 in 2017 and further to 2.05 in 2018, before declining again to 1.83 in 2019. This pattern suggests a period of efficiency reduction followed by improvement and a subsequent decline in how effectively assets generated revenue. The adjusted total asset turnover ratio follows a similar trend, starting at 1.98 in 2015, falling to 1.53 in 2016, then rising to 1.74 in 2017, 1.95 in 2018, and dropping again to 1.7 in 2019.

Overall, while asset base expansion is evident and consistent, the ability to utilize those assets to generate revenue experienced volatility. The inventory LIFO reserve adjustment causes an increase in reported asset values, which slightly reduces turnover ratios when adjusted data are considered. This adjustment implies that inventory accounting methods materially affect asset valuations and related efficiency metrics. Management should consider these fluctuations in asset turnover in the context of operational changes or market conditions during this timeframe to better understand the drivers behind asset utilization efficiency.

Total Assets Trend

Consistent growth over the five years, both in reported and adjusted figures, with adjusted assets showing approximately 26.4% growth from 2015 to 2019.

Impact of LIFO Reserve Adjustment

Adjusted assets are higher than reported values each year, indicating inventory valuation adjustments increase total asset figures.

Asset Turnover Trend

Fluctuating pattern with an initial decline in 2016, recovery in 2017 and 2018, followed by a decrease in 2019, observed in both reported and adjusted ratios.

Efficiency Insights

Though asset base increased, turnover ratios' volatility suggests varying efficiency in asset use to generate revenue, warranting further operational analysis.

Total Assets

The reported total assets show a steady upward trend over the five-year period, increasing from 48,580 million US dollars at the end of 2015 to 58,720 million US dollars by the end of 2019. When adjusted for the inventory LIFO reserve, total assets exhibit a higher absolute value and a stronger growth trajectory, rising from 49,880 million US dollars in 2015 to 63,020 million US dollars in 2019. This adjustment indicates the material impact of LIFO reserve accounting on the company’s asset base, leading to an approximate increase of 5% to 7% in total assets annually compared to reported figures.

Stockholders’ Equity

Reported stockholders’ equity initially declined from 23,100 million US dollars in 2015 to 22,390 million US dollars in 2016. Thereafter, it experienced a recovery and growth, reaching 24,910 million by 2019. In contrast, the LIFO reserve-adjusted equity presents a more consistent and stronger growth pattern, starting at 24,400 million in 2015 and growing steadily to 29,210 million by 2019. This suggests that when inventory accounting adjustments are considered, the company's net worth reflects a more favorable and stable equity position over the period.

Financial Leverage

The reported financial leverage ratio exhibits moderate variability but overall an increasing trend, moving from 2.1 in 2015 to 2.36 in 2019. This indicates a gradual increase in the proportion of total assets financed by liabilities relative to equity. The adjusted financial leverage ratio, calculated on the basis of inventory LIFO reserve adjusted figures, is consistently lower than the reported ratio each year, ranging from 2.04 in 2015 to 2.16 in 2019. This lower leverage ratio reflects the higher equity base resulting from adjustment, suggesting a more conservative debt utilization stance than what appears from reported data alone.

Overall Insights

The adjusted data, accounting for inventory LIFO reserve, consistently presents a healthier financial position compared to reported figures. Total assets and stockholders' equity are elevated, while financial leverage is somewhat reduced when adjustments are incorporated. This adjustment helps to mitigate the understatement of asset and equity values that can result from LIFO-based inventory accounting, providing a more optimistic and stable view of financial strength and capital structure. The trends imply cautious growth in assets and equity, with a moderate rise in leverage that remains well managed through the period under review.

Net Income Trends

Reported net income attributable to the company exhibited significant volatility over the five-year period. It started moderately high, declined sharply in the second year, then surged to its peak in the third year before experiencing a decline in the subsequent years. In contrast, the adjusted net income after considering inventory LIFO reserve adjustments showed a more stable growth pattern initially, peaking in the third year and then decreasing but remaining at a relatively high level compared to the beginning of the period.

Stockholders’ Equity Trends

Reported stockholders’ equity fluctuated slightly but remained relatively stable across the period, with minor decreases and increases year over year. The adjusted stockholders’ equity, accounting for LIFO reserve adjustments, displayed a clear upward trend, steadily increasing each year and reflecting a stronger equity base when inventory accounting adjustments are considered.

Return on Equity (ROE) Analysis

Reported ROE showed substantial volatility that mirrored the reported net income pattern, with a pronounced dip in the second year, a peak in the third year, followed by a decline. Adjusted ROE presented a smoother trend line, increasing over the first three years, dropping somewhat in the fourth year, and then stabilizing at a moderate level in the final year. The adjusted ROE is consistently lower than the reported ROE in peak years but higher during the years of reported net income decline, indicating the influence of inventory LIFO reserve adjustments in smoothing profitability metrics.

Overall Financial Insights

Adjusting for inventory LIFO reserves significantly impacts reported net income and equity figures, leading to less volatility and a more consistent upward trend in adjusted equity and income measures compared to their reported counterparts. The adjustments provide a more stable view of company performance, particularly noticeable in net income and return on equity, which are vital indicators of profitability and capital efficiency.

Net Income Trends

Reported net income attributable to the company exhibited significant volatility over the analyzed period. Starting at 4,227 million US dollars in 2015, it declined sharply in 2016 to 1,555 million, then rebounded to peak at 5,106 million in 2017, before a slight increase in 2018 to 5,595 million, and subsequently fell to 3,076 million in 2019.

Adjusted net income, which accounts for inventory LIFO reserve adjustments, presented a different pattern. It started lower than the reported figure in 2015 at 2,527 million, increased steadily to 3,555 million in 2016, peaked at 6,106 million in 2017, then declined to 4,195 million in 2018 before marginally rising again to 4,476 million in 2019. This smoother trend suggests that adjustments mitigate some volatility seen in reported net income.

Total Assets Analysis

The reported total assets increased steadily over the five years, from 48,580 million US dollars in 2015 to 58,720 million in 2019, representing consistent growth in the asset base.

The adjusted total assets, incorporating inventory adjustments, were consistently higher than the reported figures, increasing from 49,880 million in 2015 to 63,020 million in 2019. The difference between adjusted and reported total assets widened over time, indicating growing impact of the LIFO reserve on asset valuation.

Return on Assets (ROA) Evaluation

The reported ROA displayed marked fluctuations, mirroring net income variations. It declined from 8.7% in 2015 to a low of 3.01% in 2016, rose to 10.3% in 2018, and then dropped to 5.24% in 2019. This volatility highlights inconsistent profitability relative to asset base when using reported figures.

Adjusted ROA, calculated using inventory LIFO reserve adjusted earnings and assets, showed less pronounced variability. It started at 5.07% in 2015, increased to a peak of 10.41% in 2017, then decreased gradually to 7.1% in 2019. These values suggest a more stable measure of asset efficiency and profitability after adjustments.

Overall Insights

The adjustments for inventory LIFO reserves significantly affect both income and asset measures, leading to notable differences in profitability ratios. Adjusted figures tend to portray a smoother earnings trend and a higher asset base, thus providing a potentially more stable and reflective measure of operational performance over time. The growing divergence between adjusted and reported values signals increasing relevance of inventory accounting methods on financial analysis for this entity.