Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The data reveals multiple trends in operational efficiency and working capital management over the five-year period from 2015 to 2019.
- Inventory turnover
- Inventory turnover shows an overall increasing trend from 22.34 in 2015 to a peak of 29.02 in 2018, followed by a slight decline to 26.64 in 2019. This indicates improved efficiency in managing and selling inventory over most of the period, with a minor reduction in turnover rate in the final year.
- Receivables turnover
- The receivables turnover ratio fluctuates significantly, decreasing sharply from 22.44 in 2015 to 15.37 in 2016, remaining relatively stable around 15-16 in the following years, with a temporary increase to 20.59 in 2018 and dropping again to 14.55 in 2019. This suggests challenges in maintaining consistent collection efficiency, with a notable deterioration in 2019.
- Payables turnover
- Payables turnover declines from 15.07 in 2015 to a low of 10.44 in 2016, then recovers moderately to 16.82 in 2018 before falling back to 12.51 in 2019. This volatility indicates some fluctuation in the rate at which the company pays its suppliers, with a slower payment pace especially apparent in 2016 and 2019.
- Working capital turnover
- Working capital turnover exhibits a general growth trend from 20.95 in 2015 to 39.03 in 2019, indicating increasingly efficient use of working capital to generate revenues across the period, with notable acceleration particularly in the final year.
- Average inventory processing period
- The average inventory processing period decreases overall from 16 days in 2015 to a low of 13 days in 2018, with a slight uptick to 14 days in 2019. This trend complements the inventory turnover rate, reflecting faster inventory movement through the supply chain up to 2018.
- Average receivable collection period
- The collection period for receivables shows deterioration during the period, increasing from 16 days in 2015 to 25 days in 2019, with fluctuations in between. This rise corresponds with the lower receivables turnover ratios in later years and signals a lengthening time to collect outstanding amounts.
- Operating cycle
- The operating cycle lengthens from 32 days in 2015 to a peak of 41 days in 2016, then declines to 31 days in 2018 before increasing again to 39 days in 2019. These fluctuations reflect varying efficiencies in inventory management and receivables collection combined.
- Average payables payment period
- The average time taken to pay suppliers rises from 24 days in 2015 to 35 days in 2016, decreases to 22 days in 2018, then lengthens again to 29 days in 2019. The overall trend suggests the company has intermittently extended payment terms to its suppliers, impacting payables turnover.
- Cash conversion cycle
- The cash conversion cycle remains relatively stable, hovering between 6 and 10 days throughout the period. It shows a slight increase over the years, reaching 10 days in 2019, indicating a marginally longer time before cash is converted back from the operating cycle.
In summary, the data suggests improved inventory management efficiency coupled with increased challenges in receivables collection, reflected in longer collection periods and fluctuating turnover ratios. Working capital utilization has strengthened significantly. Payment practices to suppliers have varied, with some extension of payment periods noticed. The cash conversion cycle, while relatively stable, shows a slight lengthening, highlighting potential opportunities to optimize liquidity management further.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of operating revenues | 100,603) | 102,810) | 84,108) | 66,743) | 77,693) | |
Inventories | 3,776) | 3,543) | 3,395) | 3,150) | 3,477) | |
Short-term Activity Ratio | ||||||
Inventory turnover1 | 26.64 | 29.02 | 24.77 | 21.19 | 22.34 | |
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Inventory turnover = Cost of operating revenues ÷ Inventories
= 100,603 ÷ 3,776 = 26.64
2 Click competitor name to see calculations.
The financial data reveals notable trends in operating costs, inventory levels, and inventory turnover ratios over the five-year period ending in 2019. The cost of operating revenues exhibited fluctuations, with a notable decrease from 2015 to 2016, followed by an increase reaching a peak in 2018 before a slight decline in 2019. Specifically, costs dropped from approximately $77 billion in 2015 to about $67 billion in 2016, then rose sharply to over $102 billion in 2018, and marginally decreased to approximately $100.6 billion in 2019.
Inventory levels showed a gradual upward trend throughout the period. Starting at $3.5 billion in 2015, inventories decreased slightly in 2016, then steadily increased each subsequent year to reach nearly $3.8 billion by the end of 2019. This incremental increase suggests a consistent buildup of stock over the years analyzed.
The inventory turnover ratio displayed considerable variability, with an overall upward trend indicating improved efficiency in managing inventory relative to operating costs. The ratio declined slightly from 22.34 in 2015 to 21.19 in 2016, then increased significantly, hitting a high of 29.02 in 2018 before decreasing slightly to 26.64 in 2019. This pattern suggests that, after a brief dip, inventory was managed more efficiently, with a peak turnover ratio implying quicker inventory movement or better alignment between inventory levels and cost of goods sold.
- Cost of Operating Revenues
- Fluctuated over five years, with a significant drop in 2016 followed by a rise peaking in 2018 and slightly decreasing in 2019.
- Inventories
- Showed a generally steady increase after a minor dip in 2016, indicating a slow buildup of inventory levels.
- Inventory Turnover
- Varied, with a dip in 2016 and a peak in 2018, suggesting improved inventory management efficiency during the later years.
Receivables Turnover
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Sales and other operating revenues | 107,293) | 111,461) | 102,354) | 84,279) | 98,975) | |
Accounts and notes receivable, net of allowances | 7,376) | 5,414) | 6,424) | 5,485) | 4,411) | |
Short-term Activity Ratio | ||||||
Receivables turnover1 | 14.55 | 20.59 | 15.93 | 15.37 | 22.44 | |
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Receivables turnover = Sales and other operating revenues ÷ Accounts and notes receivable, net of allowances
= 107,293 ÷ 7,376 = 14.55
2 Click competitor name to see calculations.
The analysis of the financial data from 2015 to 2019 reveals notable trends in sales, receivables, and turnover ratios.
- Sales and Other Operating Revenues
- Sales demonstrated variability across the five-year period. After a decline from approximately $98.98 billion in 2015 to $84.28 billion in 2016, sales rebounded to $102.35 billion in 2017 and continued to rise to a peak of $111.46 billion in 2018. However, in 2019, sales slightly contracted to $107.29 billion. Overall, this indicates a recovery phase post-2016, reaching the highest revenue in 2018 before a minor downturn.
- Accounts and Notes Receivable, Net of Allowances
- Receivables showed a general upward trend over the period, increasing from $4.41 billion in 2015 to $7.38 billion in 2019. There was a notable rise from 2018 to 2019, with receivables growing from $5.41 billion to $7.38 billion, suggesting potentially more credit extended to customers or slower collections in that year.
- Receivables Turnover Ratio
- The receivables turnover ratio declined significantly from 22.44 in 2015 to 15.37 in 2016 and remained relatively stable but below 2015 levels through 2019, reaching its lowest point at 14.55 in 2019. This decline indicates slower collection efficiency over the period, with cash collection taking longer despite fluctuating sales.
In summary, while sales saw an overall recovery after a decline in 2016, accounts receivable increased steadily, and the turnover ratio decreased, indicating potential challenges in cash collection and credit management efficiency. These trends may warrant further review of credit policies and accounts receivable management to improve cash flow stability.
Payables Turnover
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of operating revenues | 100,603) | 102,810) | 84,108) | 66,743) | 77,693) | |
Accounts payable | 8,043) | 6,113) | 7,242) | 6,395) | 5,155) | |
Short-term Activity Ratio | ||||||
Payables turnover1 | 12.51 | 16.82 | 11.61 | 10.44 | 15.07 | |
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Payables turnover = Cost of operating revenues ÷ Accounts payable
= 100,603 ÷ 8,043 = 12.51
2 Click competitor name to see calculations.
The analysis of the given financial data reveals notable fluctuations and trends over the five-year period ending December 31, 2019.
- Cost of Operating Revenues
- There is an initial decrease from 77,693 million USD in 2015 to 66,743 million USD in 2016, representing a significant reduction. This is followed by a strong upward trend in 2017 and 2018, where the cost increases to 84,108 million USD and further to 102,810 million USD, respectively. The cost slightly declines to 100,603 million USD in 2019 but remains substantially higher than the levels observed in 2015 and 2016. Overall, the trend indicates increased operating costs after 2016, peaking in 2018.
- Accounts Payable
- Accounts payable shows a general upward trajectory across the period, starting at 5,155 million USD in 2015 and rising to 8,043 million USD by 2019. Although there is some fluctuation, particularly a dip in 2018 to 6,113 million USD after a peak in 2017 (7,242 million USD), the long-term trend indicates an increase in liabilities to suppliers or creditors over time.
- Payables Turnover Ratio
- The payables turnover ratio reflects the frequency at which the company pays off its accounts payable during the year and exhibits considerable variability. The ratio declines sharply from 15.07 in 2015 to 10.44 in 2016, indicating slower payment cycles. In 2017, there is a modest increase to 11.61, followed by a significant rise to 16.82 in 2018, suggesting quicker payments. However, the ratio falls again to 12.51 in 2019, indicating a moderate decrease in payment speed relative to the prior year.
Summarizing, the data indicates increasing operating costs after a decrease in 2016, alongside a growing accounts payable balance. The payables turnover ratio fluctuates notably, with the highest turnover in 2018, coinciding with the peak cost of operating revenues. These patterns may suggest changes in operational scale, supplier terms, or cash management strategies over the period under review.
Working Capital Turnover
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | 14,395) | 13,209) | 14,390) | 12,680) | 12,256) | |
Less: Current liabilities | 11,646) | 8,935) | 10,107) | 9,463) | 7,531) | |
Working capital | 2,749) | 4,274) | 4,283) | 3,217) | 4,725) | |
Sales and other operating revenues | 107,293) | 111,461) | 102,354) | 84,279) | 98,975) | |
Short-term Activity Ratio | ||||||
Working capital turnover1 | 39.03 | 26.08 | 23.90 | 26.20 | 20.95 | |
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Working capital turnover = Sales and other operating revenues ÷ Working capital
= 107,293 ÷ 2,749 = 39.03
2 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends in key metrics over the five-year period ending in 2019.
- Working Capital
- The working capital exhibited fluctuations during the period. Starting at US$4,725 million in 2015, it decreased to US$3,217 million in 2016, followed by an increase to US$4,283 million in 2017 and remaining relatively steady in 2018 at US$4,274 million. However, in 2019, there was a substantial decline to US$2,749 million, marking the lowest working capital level within the analyzed timeframe.
- Sales and Other Operating Revenues
- Sales and other operating revenues showed variability but generally presented an upward trend with some volatility. Revenues decreased from US$98,975 million in 2015 to US$84,279 million in 2016, then surged to US$102,354 million in 2017 and continued to rise to US$111,461 million in 2018. In 2019, there was a slight decrease to US$107,293 million. Overall, revenues remained strong with a peak in 2018.
- Working Capital Turnover
- The working capital turnover ratio demonstrated an overall increasing trend, indicating improved efficiency in using working capital to generate sales. Starting at 20.95 times in 2015, it increased to 26.2 in 2016, slightly decreased to 23.9 in 2017, then rose again to 26.08 in 2018. In 2019, a significant increase to 39.03 was observed, which coincides with the reduction in working capital and relatively stable sales, further reflecting enhanced working capital utilization efficiency.
In summary, the data show a company managing fluctuations in working capital alongside relatively robust sales performance. The sharp reduction in working capital in the final year, combined with a high working capital turnover, suggests a strategic emphasis on optimizing capital to sustain sales levels. Continued monitoring of these trends is necessary to assess the impact on liquidity and operational effectiveness.
Average Inventory Processing Period
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | 26.64 | 29.02 | 24.77 | 21.19 | 22.34 | |
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | 14 | 13 | 15 | 17 | 16 | |
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 26.64 = 14
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibited a general upward trend from 2015 to 2018, increasing from 22.34 to 29.02. This indicates an improvement in the efficiency with which inventory was managed and sold over this period. However, in 2019, the ratio decreased to 26.64, suggesting a slight decline in inventory turnover efficiency compared to the previous year, though it remained higher than the 2015 and 2016 levels.
- Average Inventory Processing Period
- The average inventory processing period, measured in days, generally declined from 2015 to 2018, dropping from 16 days to 13 days. This reduction supports the observation of improved inventory turnover during these years, indicating faster processing and turnover of inventory. In 2019, the processing period slightly increased to 14 days, consistent with the observed decrease in inventory turnover ratio for that year, which may point to a marginal slowdown in inventory movement.
- Overall Interpretation
- The data suggest that inventory management became more efficient from 2015 through 2018, as evidenced by higher turnover ratios and shorter processing periods. The partial reversal in 2019 could warrant further investigation to determine underlying causes, such as changes in demand, supply chain disruptions, or inventory accumulation strategies.
Average Receivable Collection Period
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | 14.55 | 20.59 | 15.93 | 15.37 | 22.44 | |
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | 25 | 18 | 23 | 24 | 16 | |
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 14.55 = 25
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibits significant fluctuations across the five-year period. Starting at a high level of 22.44 in 2015, the ratio declines noticeably to 15.37 in 2016 and remains relatively stable at 15.93 in 2017. A recovery is observed in 2018 with the ratio increasing to 20.59, followed by a sharp decline to the lowest point in the period, 14.55 in 2019. This variability indicates inconsistency in the company's efficiency in collecting receivables over the years.
- Average Receivable Collection Period
- The average collection period, expressed in days, demonstrates an inverse relationship to the receivables turnover ratio, as expected. The period lengthens considerably from 16 days in 2015 to 24 days in 2016, slightly decreases to 23 days in 2017, and then shortens significantly to 18 days in 2018. In 2019, the average collection period increases again to 25 days, the longest duration in the dataset. These shifts further reinforce the observed volatility in receivables management and collection efficiency.
- Overall Insights
- Over the five-year span, the company’s receivables management reflects variability with no clear trend of consistent improvement or deterioration. The marked increase in the average collection period in 2016 and 2019 suggests potential challenges in receivables collections during these years, which correspond with the lower turnover ratios, implying slower cash inflows from customers. Conversely, the improvement in 2018 indicates a temporary enhancement in collection effectiveness. The data underscores the importance of monitoring receivables processes to maintain steady liquidity and operational efficiency.
Operating Cycle
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | 14 | 13 | 15 | 17 | 16 | |
Average receivable collection period | 25 | 18 | 23 | 24 | 16 | |
Short-term Activity Ratio | ||||||
Operating cycle1 | 39 | 31 | 38 | 41 | 32 | |
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 14 + 25 = 39
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period fluctuated within a narrow range over the five-year span. It began at 16 days at the end of 2015, increased slightly to 17 days in 2016, then decreased to 15 days in 2017 and further down to 13 days in 2018, before rising modestly to 14 days in 2019. Overall, there was a slight improvement in inventory processing efficiency, as indicated by the downward trend from 2016 to 2018.
- Average Receivable Collection Period
- The average receivable collection period exhibited more variability. Starting at 16 days in 2015, it rose substantially to 24 days in 2016 and remained relatively stable at 23 days in 2017. In 2018, it decreased to 18 days but then increased sharply to 25 days by the end of 2019. This variability suggests fluctuations in the company's effectiveness in collecting receivables, with the longest collection period occurring in 2019.
- Operating Cycle
- The operating cycle closely mirrored the combined impact of the inventory processing and receivable collection periods. It increased from 32 days in 2015 to 41 days in 2016, then slightly decreased to 38 days in 2017. The cycle shortened significantly to 31 days in 2018 but increased again to 39 days in 2019. This pattern highlights a generally longer cash conversion period in 2016 and 2019, and a more efficient operating cycle in 2018.
Average Payables Payment Period
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | 12.51 | 16.82 | 11.61 | 10.44 | 15.07 | |
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | 29 | 22 | 31 | 35 | 24 | |
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 12.51 = 29
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits a fluctuating pattern over the five-year period. It decreased significantly from 15.07 in 2015 to 10.44 in 2016, indicating a slower rate of payment to suppliers. This was followed by a moderate increase to 11.61 in 2017. A marked improvement occurred in 2018, with the ratio rising sharply to 16.82, suggesting faster payment cycles. However, in 2019, the ratio declined again to 12.51, reflecting a moderation in the speed of payables turnover compared to the previous year.
- Average Payables Payment Period
- The average payables payment period inversely correlates with the payables turnover ratio, as expected. It starts at 24 days in 2015 then lengthens considerably to 35 days in 2016, implying slower payments to vendors. This period decreases somewhat to 31 days in 2017, before a substantial reduction to 22 days in 2018, reflecting a quicker payment process. In 2019, the payment period extends slightly again to 29 days, indicating a slight relaxation in payment speed.
- Observations
- The fluctuations in both payables turnover and average payment periods suggest changes in cash management or supplier payment policies over the years. The significant improvements in 2018 point to an increased efficiency or strategic shift towards faster payments, potentially to take advantage of early payment discounts or improve supplier relations. The moderate reversals in 2019 might reflect external factors affecting payment capabilities or a deliberate operational decision to extend payment terms.
Cash Conversion Cycle
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | 14 | 13 | 15 | 17 | 16 | |
Average receivable collection period | 25 | 18 | 23 | 24 | 16 | |
Average payables payment period | 29 | 22 | 31 | 35 | 24 | |
Short-term Activity Ratio | ||||||
Cash conversion cycle1 | 10 | 9 | 7 | 6 | 8 | |
Benchmarks | ||||||
Cash Conversion Cycle, Competitors2 | ||||||
Chevron Corp. | — | — | — | — | — | |
ConocoPhillips | — | — | — | — | — | |
Exxon Mobil Corp. | — | — | — | — | — | |
Occidental Petroleum Corp. | — | — | — | — | — |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 14 + 25 – 29 = 10
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period demonstrated a slight fluctuation over the observed years. Starting at 16 days in 2015, it peaked at 17 days in 2016, followed by a decline to 15 days in 2017. The trend continued downward to 13 days in 2018, before experiencing a small increase to 14 days in 2019. This indicates an overall improvement in inventory management efficiency with shorter processing durations, although the slight increase in 2019 suggests a minor reversal in this trend.
- Average Receivable Collection Period
- The average receivable collection period showed notable variability. Beginning at 16 days in 2015, it sharply increased to 24 days in 2016 and remained relatively stable at 23 days in 2017. A decrease occurred in 2018 down to 18 days, but it again rose significantly to 25 days in 2019. This pattern reveals inconsistent efficiency in collections, with prolonged periods in certain years that could impact cash flow.
- Average Payables Payment Period
- The average payables payment period exhibited a similar pattern of fluctuation. Initially 24 days in 2015, it increased substantially to 35 days in 2016, then slightly declined to 31 days in 2017. A more pronounced reduction occurred in 2018, bringing the period down to 22 days, before it increased again to 29 days in 2019. This reflects varying payment strategies, possibly influenced by cash management policies or supplier negotiations.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) remained relatively stable throughout the period, with minor fluctuations. Starting at 8 days in 2015, it decreased to 6 days in 2016, rose marginally to 7 days in 2017, then increased to 9 days in 2018, and finally reached 10 days in 2019. Despite the minimal changes, this upward trend towards the end of the period may suggest a slight lengthening in the overall time taken to convert investments in inventory and receivables back into cash.