Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
United States Steel Corp., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of the financial ratios over the five-year period reveals several noteworthy trends in asset and equity utilization.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibits a declining trend from 2.91 in 2018 to a low of 1.79 in 2020, indicating a reduced efficiency in generating sales from fixed assets during this period. Thereafter, it recovers to 2.8 in 2021 but slightly decreases again to 2.48 in 2022. This pattern suggests volatility in the company's ability to leverage its fixed assets effectively.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- When considering operating leases and right-of-use assets, the ratio follows a similar trajectory to the traditional net fixed asset turnover, albeit at marginally lower levels post-2018. Starting at 2.91 in 2018, it declines to 1.72 by 2020. It then rebounds to 2.73 in 2021 before a slight decrease to 2.44 in 2022. This indicates that leased assets have a comparable impact on asset utilization trends.
- Total Asset Turnover
- The total asset turnover ratio shows a clear downward movement from 1.29 in 2018 to 0.81 in 2020, reflecting a substantial decrease in efficiency of generating revenue from total assets during that timeframe. A recovery is observed in 2021 to 1.14, followed by a slight decline to 1.08 in 2022. The overall pattern suggests fluctuating asset utilization with partial improvement after 2020.
- Equity Turnover
- The equity turnover ratio exhibits a persistent downward trend over the five years, decreasing consistently from 3.37 in 2018 to 2.06 in 2022. This steady decline suggests diminishing efficiency in generating sales relative to shareholders' equity, which may point to increasing equity levels without proportional revenue growth or a decline in revenue generation efficiency.
In summary, the period is characterized by a general decline in turnover ratios across all categories, with the most pronounced decreases occurring between 2018 and 2020. The year 2021 saw a partial recovery in asset utilization metrics, though not to previous peak levels. The equity turnover ratio, however, generally declines without recovery, indicating potential challenges in equity efficiency.
Net Fixed Asset Turnover
United States Steel Corp., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Property, plant and equipment, net | 8,492) | 7,254) | 5,444) | 5,447) | 4,865) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 2.48 | 2.80 | 1.79 | 2.38 | 2.91 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.71 | 0.76 | 0.48 | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Materials | 1.35 | 1.27 | 0.99 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 21,065 ÷ 8,492 = 2.48
2 Click competitor name to see calculations.
The financial data reveals several trends and changes over the five-year period ending December 31, 2022.
- Net Sales
- Net sales demonstrate a declining trend from 2018 to 2020, decreasing from 14,178 million US dollars in 2018 to 9,741 million US dollars in 2020. A notable recovery and growth occur in 2021 and 2022, with net sales rising sharply to 20,275 million US dollars and further to 21,065 million US dollars, respectively. This indicates a substantial rebound post-2020 downturn, possibly reflecting improved market conditions or operational performance.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment shows a consistent upward trend throughout the period. Starting at 4,865 million US dollars in 2018, it increases steadily to 5,447 million in 2019, remains stable in 2020, and experiences significant growth in 2021 and 2022, reaching 7,254 million and 8,492 million US dollars, respectively. This suggests ongoing investment and expansion in fixed assets.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio, which measures efficiency in using fixed assets to generate sales, follows a declining pattern from 2.91 in 2018 to 1.79 in 2020, aligning with the drop in sales during this period. It then recovers in 2021 to 2.80 but slightly decreases again to 2.48 in 2022. Despite the asset growth, the turnover ratio's partial recovery indicates improvement but not yet a return to the highest efficiency recorded in 2018.
Overall, the trends indicate an initial period of contraction with declining sales and efficiency up to 2020, followed by significant recovery in sales and asset base from 2021 onwards. Investment in property and equipment appears to have supported the sales rebound, although efficiency gains in asset utilization have been moderate compared to earlier levels.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
United States Steel Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Property, plant and equipment, net | 8,492) | 7,254) | 5,444) | 5,447) | 4,865) | |
| Operating lease assets | 146) | 185) | 214) | 230) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 8,638) | 7,439) | 5,658) | 5,677) | 4,865) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 2.44 | 2.73 | 1.72 | 2.28 | 2.91 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.70 | 0.75 | 0.48 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Materials | 1.28 | 1.21 | 0.95 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 21,065 ÷ 8,638 = 2.44
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2022.
- Net Sales
- Net sales experienced fluctuations throughout the observed years. Starting at 14,178 million USD in 2018, there was a decline in the following two years, reaching a low of 9,741 million USD in 2020. Subsequently, net sales increased significantly, exceeding pre-2019 levels with a rise to 20,275 million USD in 2021 and a further moderate increase to 21,065 million USD in 2022. This pattern suggests a recovery and growth after a downturn, possibly linked to external factors impacting sales in 2019 and 2020.
- Property, Plant and Equipment, Net (Including Operating Lease, Right-of-Use Asset)
- The net value of property, plant, and equipment showed consistent growth each year. From 4,865 million USD in 2018, it increased steadily to 8,638 million USD in 2022. The most significant increments occurred between 2020 and 2022, indicating substantial investment or capital expenditures during this period. This upward trend may reflect expansion or modernization efforts.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio, which measures efficiency in using fixed assets to generate sales, declined from 2.91 in 2018 to 1.72 in 2020. This indicates a reduction in asset utilization efficiency during the same period when sales decreased and asset base was growing. However, there was a recovery to 2.73 in 2021, followed by a slight decrease to 2.44 in 2022. While performance improved after the low point in 2020, efficiency did not fully return to 2018 levels, suggesting relative underutilization despite increased asset investments.
Overall, the data reflects a period of contraction followed by recovery and growth in sales, supported by significant investments in fixed assets. However, efficiency in asset utilization showed volatility, improving after a downturn but not fully rebounding to earlier performance levels.
Total Asset Turnover
United States Steel Corp., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Total assets | 19,458) | 17,816) | 12,059) | 11,608) | 10,982) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 1.08 | 1.14 | 0.81 | 1.11 | 1.29 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.45 | 0.48 | 0.34 | — | — | |
| Total Asset Turnover, Industry | ||||||
| Materials | 0.51 | 0.49 | 0.40 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Net sales ÷ Total assets
= 21,065 ÷ 19,458 = 1.08
2 Click competitor name to see calculations.
The financial data indicates notable fluctuations in net sales, total assets, and total asset turnover over the five-year period.
- Net Sales
- Net sales showed a declining trend from 2018 to 2020, decreasing from $14,178 million in 2018 to $9,741 million in 2020. However, there was a significant recovery and growth in the subsequent years, with net sales rising sharply to $20,275 million in 2021 and further to $21,065 million in 2022. This recovery suggests an improvement in market conditions or operational performance following the dip observed in the earlier period.
- Total Assets
- Total assets demonstrated a consistent upward trend across the entire period, increasing from $10,982 million in 2018 to $19,458 million in 2022. This steady growth suggests ongoing investments or asset accumulation, possibly to support expanding operations or improve production capacity.
- Total Asset Turnover
- The total asset turnover ratio, which measures the efficiency of asset use in generating sales, showed a decline from 1.29 in 2018 to a low of 0.81 in 2020. This decrease corresponds with the drop in net sales and the concurrent increase in assets, indicating less efficient asset utilization during this period. The ratio improved to 1.14 in 2021 but slightly decreased again to 1.08 in 2022, though it did not return to the higher levels observed in 2018 and 2019. This suggests some recovery in efficiency but also indicates room for further improvement.
In summary, the data reflects an initial period of decline in sales and asset utilization efficiency coinciding with asset growth, followed by a strong rebound in sales and a partial recovery in operational efficiency. Continued asset growth paired with improving but moderate turnover rates indicates ongoing efforts to capitalize on investments, with a focus needed on enhancing asset utilization to sustain revenue growth.
Equity Turnover
United States Steel Corp., equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 21,065) | 20,275) | 9,741) | 12,937) | 14,178) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 2.06 | 2.25 | 2.57 | 3.16 | 3.37 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 1.46 | 1.63 | 1.40 | — | — | |
| Equity Turnover, Industry | ||||||
| Materials | 1.33 | 1.22 | 0.98 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Net sales ÷ Total United States Steel Corporation stockholders’ equity
= 21,065 ÷ 10,218 = 2.06
2 Click competitor name to see calculations.
The financial data over the period indicates several notable trends in the company's performance and financial position.
- Net Sales
- Net sales experienced a decline from 2018 through 2020, falling from 14,178 million USD in 2018 to 9,741 million USD in 2020. This constituted a significant reduction over the three-year span. However, a sharp recovery is observed in 2021, with net sales more than doubling to 20,275 million USD. The upward trajectory continued in 2022, with sales reaching 21,065 million USD, representing the highest value recorded over the five-year period.
- Stockholders' Equity
- Stockholders’ equity showed a declining trend initially, decreasing from 4,202 million USD in 2018 to 3,786 million USD in 2020. Thereafter, a strong and substantial increase occurred in 2021, with equity rising to 9,010 million USD. This positive momentum persisted in 2022, where equity further increased to 10,218 million USD, indicating a strengthened financial base in the latter years.
- Equity Turnover Ratio
- The equity turnover ratio, which measures the efficiency of generating sales from equity, demonstrated a steady decline across the period. Starting at 3.37 in 2018, the ratio decreased each year, reaching 2.06 by 2022. This trend suggests that, despite the increase in net sales and equity in recent years, the company generated relatively fewer sales per unit of equity, indicating a reduced turnover efficiency over time.
Overall, the data depicts an initial contraction in both sales and equity up to 2020, followed by a robust recovery and expansion in 2021 and 2022. However, efficiency in the utilization of equity to generate sales has steadily diminished throughout the period under review.