Civitas Resources Inc (CIVI)

Short-term

Turnover ratios

Civitas Resources Inc's inventory turnover has shown a consistent improvement over the years, increasing from 17.70 in 2020 to 145.08 in 2023, indicating that the company is efficiently managing its inventory by selling and replenishing it at a faster rate.

On the other hand, the receivables turnover ratio has been somewhat volatile, decreasing significantly in 2021 before picking up in 2022 and 2024. A lower receivables turnover ratio may indicate that the company is taking longer to collect payments from its customers, which could potentially impact cash flow and liquidity.

The payables turnover ratio has also fluctuated over the years, with a significant decrease in 2021 followed by some stability in the subsequent years. A lower payables turnover ratio could suggest that the company is taking longer to pay its suppliers, which may have implications for vendor relationships and working capital management.

The working capital turnover ratio, although missing data for 2021 and 2024, has shown an increase in 2022 compared to 2020 and 2023, implying that the company is generating revenue more efficiently from its working capital. It would be beneficial to assess the missing data points to get a complete picture of the company's working capital management efficiency.

Overall, an in-depth analysis of Civitas Resources Inc's activity ratios reveals varying trends in inventory turnover, receivables turnover, payables turnover, and working capital turnover, highlighting the company's performance in managing its operating cycle and working capital effectively.

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Average number of days

Civitas Resources Inc's inventory management efficiency has improved over the years as reflected in the Days of Inventory on Hand ratio. In 2020, the company held inventory for an average of 20.62 days, which decreased to 11.82 days in 2021 and further to 12.01 days in 2022. This indicates that the company is able to sell its inventory faster, thereby reducing the holding period.

The Days of Sales Outstanding ratio, which measures how quickly the company collects its accounts receivable, shows some fluctuations. In 2020, Civitas had a DSO of 55.47 days, which significantly increased to 143.24 days in 2021, indicating a potential issue with collecting payments from customers. However, the DSO improved to 33.21 days in 2022, suggesting better management of accounts receivable. In 2023 and 2024, the DSO remained relatively stable at around 56 days and 45 days, respectively.

Regarding the Number of Days of Payables, Civitas has been maintaining a relatively short payment period to its suppliers. In 2020, the company took only 4.34 days on average to pay its payables. This increased to 18.73 days in 2021, but then decreased to 11.89 days in 2022 and further to 14.92 days in 2023. In 2024, the number of days of payables decreased significantly to 5.67 days, possibly indicating efficient cash management or favorable payment terms with suppliers.

Overall, the company seems to be managing its working capital effectively, with improvements in inventory turnover and payables management, although there were fluctuations in accounts receivable collection efficiency.

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Long-term

Civitas Resources Inc's long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover, provide insights into the company's efficiency in generating sales from its fixed assets and total assets, respectively.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue.
- In 2020, the ratio was 0.22, indicating that for each dollar of fixed assets, Civitas Resources generated $0.22 in sales.
- The ratio decreased to 0.16 in 2021, suggesting a decline in the efficiency of utilizing fixed assets to generate revenue.
- In 2022, there was a significant improvement as the ratio increased to 0.57, indicating that the company improved its efficiency in generating sales from fixed assets.
- The ratio decreased in 2023 to 0.28 and slightly increased in 2024 to 0.38, showing some fluctuations in the utilization of fixed assets for revenue generation over the period.

2. Total Asset Turnover:
- The Total Asset Turnover ratio measures how effectively a company utilizes all its assets to generate revenue.
- In 2020, the ratio was 0.18, indicating that for each dollar of total assets, Civitas Resources generated $0.18 in sales.
- The ratio declined to 0.14 in 2021, suggesting a decrease in the efficiency of using total assets to generate revenue.
- In 2022, there was a notable improvement as the ratio increased to 0.47, indicating better utilization of total assets for revenue generation.
- The ratio decreased in 2023 to 0.23 and increased slightly in 2024 to 0.35, showing fluctuations in the efficiency of utilizing total assets for sales generation.

Overall, the analysis of Civitas Resources Inc's long-term activity ratios indicates varying trends in the efficiency of utilizing fixed and total assets to generate revenue over the period under review. These fluctuations suggest the need for further assessment of the company's asset management strategies to optimize its operational efficiency and bottom-line performance.