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Short-term (Operating) Activity Analysis
Difficulty: Beginner
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Ratios (Summary)
Phillips 66, short-term (operating) activity ratios
Source: Based on data from Phillips 66 Annual Reports
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Phillips 66's inventory turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Phillips 66's receivables turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Phillips 66's payables turnover declined from 2015 to 2016 but then slightly increased from 2016 to 2017. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Phillips 66's working capital turnover improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017. |
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Phillips 66's average inventory processing period deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Phillips 66's average receivable collection period deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Phillips 66's operating cycle deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Phillips 66's average payables payment period increased from 2015 to 2016 but then slightly declined from 2016 to 2017. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. |
Inventory Turnover
Phillips 66, inventory turnover calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Inventory turnover = Cost of operating revenues ÷ Inventories
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Phillips 66's inventory turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Receivables Turnover
Phillips 66, receivables turnover calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Receivables turnover = Sales and other operating revenues ÷ Accounts and notes receivable, net of allowances
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Phillips 66's receivables turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Payables Turnover
Phillips 66, payables turnover calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Payables turnover = Cost of operating revenues ÷ Accounts payable
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Phillips 66's payables turnover declined from 2015 to 2016 but then slightly increased from 2016 to 2017. |
Working Capital Turnover
Phillips 66, working capital turnover calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Working capital turnover = Sales and other operating revenues ÷ Working capital
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Phillips 66's working capital turnover improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017. |
Average Inventory Processing Period
Phillips 66, average inventory processing period calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Phillips 66's average inventory processing period deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Average Receivable Collection Period
Phillips 66, average receivable collection period calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Phillips 66's average receivable collection period deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Operating Cycle
Phillips 66, operating cycle calculation, comparison to benchmarks
No. of days
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =
| Ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Phillips 66's operating cycle deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Average Payables Payment Period
Phillips 66, average payables payment period calculation, comparison to benchmarks
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Phillips 66's average payables payment period increased from 2015 to 2016 but then slightly declined from 2016 to 2017. |
Cash Conversion Cycle
Phillips 66, cash conversion cycle calculation, comparison to benchmarks
No. of days
Source: Based on data from Phillips 66 Annual Reports
2017 Calculations
1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
| Ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. |
