ConocoPhillips (COP)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 16.57 | 28.76 | 16.59 | 9.72 | 12.89 |
| Receivables turnover | — | 7,135.82 | 366.62 | 161.93 | 10.78 |
| Payables turnover | — | 5.73 | 4.01 | 3.65 | 4.16 |
| Working capital turnover | 12.98 | 13.30 | 11.37 | 2.80 | 3.72 |
Activity ratios provide insights into how efficiently a company manages its assets and liabilities to generate revenue.
1. Inventory turnover: Conoco Phillips has shown fluctuating inventory turnover ratios over the past five years, indicating variability in managing its inventory levels. A higher turnover ratio suggests efficient management of inventory, and the company saw a significant improvement in 2022 which declined in 2023.
2. Receivables turnover: The receivables turnover ratio reflects how quickly the company collects its outstanding receivables. Conoco Phillips has consistently maintained a healthy turnover ratio, indicating efficient collection practices. The ratio has remained relatively stable over the years, demonstrating the company's effectiveness in managing its accounts receivable.
3. Payables turnover: The payables turnover ratio measures how quickly the company pays its suppliers. Conoco Phillips has shown a gradual improvement in this ratio over the years, indicating better management of its accounts payable. A higher turnover ratio suggests that the company is efficiently managing its payables.
4. Working capital turnover: This ratio measures how effectively the company utilizes its working capital to generate revenue. Conoco Phillips has shown a significant increase in working capital turnover over the years, indicating improved efficiency in utilizing its current assets and liabilities to drive sales. A higher turnover ratio implies that the company is effectively utilizing its working capital to generate revenue.
Overall, the analysis of Conoco Phillips' activity ratios suggests that the company has been efficient in managing its assets and liabilities to drive revenue generation. The trends in these ratios provide valuable insights into the company's operational efficiency and effectiveness in managing its resources to support its business activities.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 22.03 | 12.69 | 22.00 | 37.56 | 28.31 |
| Days of sales outstanding (DSO) | days | — | 0.05 | 1.00 | 2.25 | 33.85 |
| Number of days of payables | days | — | 63.64 | 91.09 | 100.06 | 87.64 |
Days of inventory on hand (DOH) measures how many days on average inventory is held before being sold. In the case of Conoco Phillips, the DOH has varied significantly over the past five years, ranging from a low of 13.10 days in 2022 to a high of 45.27 days in 2020. The increase in DOH from 13.10 days in 2022 to 23.22 days in 2023 may indicate a slower turnover of inventory or potential difficulties in managing inventory levels efficiently.
Days of sales outstanding (DSO) indicates the average number of days it takes to collect revenue after a sale is made. Conoco Phillips' DSO has fluctuated but generally remained within a certain range over the years, with the highest level observed in 2021 at 53.12 days. The decrease in DSO from 53.12 days in 2021 to 35.59 days in 2023 suggests an improvement in the company's collection process, leading to quicker conversion of sales into cash.
Number of days of payables measures how long a company takes to pay its bills to suppliers. Conoco Phillips' days of payables have also shown variability, with the highest level recorded in 2020 at 121.91 days. The decrease in days of payables from 121.91 days in 2020 to 84.99 days in 2023 may imply better management of payables or a more efficient cash conversion cycle.
Overall, analyzing Conoco Phillips' activity ratios suggests that the company has experienced fluctuations in inventory management, collection efficiency, and payment practices over the years. A decreasing DSO and improving DOH are positive signs, indicating potential enhancements in working capital management and operational efficiency.
See also:
ConocoPhillips Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.81 | 1.21 | 0.71 | 0.47 | 0.87 |
| Total asset turnover | 0.59 | 0.84 | 0.51 | 0.30 | 0.52 |
Conoco Phillips' long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into how efficiently the company is utilizing its assets to generate revenue.
The fixed asset turnover ratio has fluctuated over the past five years, ranging from 0.47 in 2020 to 1.21 in 2022. The ratio indicates that for every dollar invested in fixed assets, the company generated sales amounting to 0.80 in 2023. The increasing trend from 2020 to 2022 suggests that Conoco Phillips was able to improve the efficiency of its fixed asset utilization. However, the decline in 2023 could signify a potential decrease in productivity or a change in the company's asset structure.
On the other hand, the total asset turnover ratio also experienced fluctuations, with the lowest ratio of 0.30 in 2020 and the highest ratio of 0.84 in 2022. This ratio determines how well the company is using all its assets to generate revenue. In essence, for every dollar of assets, Conoco Phillips generated 0.59 in revenue in 2023. Like the fixed asset turnover ratio, the total asset turnover ratio shows improvement over the years, indicating enhanced overall asset efficiency.
Overall, Conoco Phillips has shown a mixed performance in terms of long-term asset efficiency, with varying trends in both fixed asset turnover and total asset turnover ratios. Further analysis of the company's asset management practices and strategies may be required to identify the underlying factors impacting these ratios.