Chevron Corp (CVX)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 14.74 | 18.44 | 14.09 | 10.63 | 16.54 |
| Receivables turnover | 10.09 | 12.04 | 8.82 | 8.25 | 11.00 |
| Payables turnover | 6.21 | 8.02 | 5.82 | 5.51 | 6.86 |
| Working capital turnover | 22.65 | 15.26 | 23.39 | 24.31 | 81.44 |
Chevron Corp.'s activity ratios provide insights into the company's efficiency in managing its resources.
1. Inventory turnover: The inventory turnover ratio indicates how effectively Chevron is managing its inventory levels. The trend shows some fluctuations over the years, with a peak in 2022 and a dip in 2020. The company is able to turn over its inventory approximately 13 to 17 times a year.
2. Receivables turnover: The receivables turnover ratio reflects how quickly Chevron collects payments from its customers. The trend shows fluctuations, with a decrease in 2021 followed by a slight increase in 2022. The company collects payment approximately 9 to 11 times a year.
3. Payables turnover: The payables turnover ratio shows how quickly Chevron pays its suppliers. The trend indicates fluctuations, with a peak in 2021 and a slight decrease in 2022. The company pays its suppliers approximately 5 to 7 times a year.
4. Working capital turnover: The working capital turnover ratio measures how efficiently Chevron utilizes its working capital to generate revenue. The trend shows significant fluctuations, with a substantial decrease in 2022 followed by an increase in 2023. The company generates revenue approximately 14 to 78 times for each dollar of working capital.
Overall, Chevron's activity ratios demonstrate varying levels of efficiency in managing inventory, receivables, payables, and working capital over the years. The company's ability to effectively turn over its resources reflects its operational performance and management of liquidity.
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 | 24.77 | 19.79 | 25.91 | 34.33 | 22.07 |
| Days of sales outstanding (DSO) | days | 36.18 | 30.32 | 41.38 | 44.22 | 33.20 |
| Number of days of payables | days | 58.74 | 45.49 | 62.74 | 66.22 | 53.22 |
Activity ratios reflect how efficiently a company manages its resources and operations to generate sales. Let's analyze Chevron Corp.'s activity ratios:
1. Days of Inventory on Hand (DOH):
- In 2023, Chevron held inventory for approximately 26.37 days, which increased from 20.70 days in 2022.
- The increase in DOH indicates that Chevron might be carrying more inventory relative to its sales level in 2023 compared to the previous year. This could tie up capital and increase carrying costs.
2. Days of Sales Outstanding (DSO):
- DSO for Chevron was 36.93 days in 2023, up from 31.68 days in 2022.
- The increase in DSO suggests that Chevron took longer to collect payment from customers in 2023, indicating potential issues with accounts receivable management or credit policies.
3. Number of Days of Payables:
- Chevron had 62.54 days of payables in 2023, an increase from 47.58 days in 2022.
- The increase in the number of days of payables suggests that Chevron took longer to pay its suppliers in 2023, potentially benefiting from improved working capital management.
Overall, the analysis indicates that Chevron's management of inventory, accounts receivable, and accounts payable fluctuated in 2023 compared to previous years. Monitoring these activity ratios is vital to assessing the company's operational efficiency and potential liquidity issues.
See also:
Chevron Corp 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 | 1.31 | 1.71 | 1.11 | 0.60 | 0.97 |
| Total asset turnover | 0.77 | 0.96 | 0.68 | 0.39 | 0.62 |
The fixed asset turnover ratio for Chevron Corp. has shown fluctuations over the past five years, ranging from 0.60 to 1.64. This ratio indicates the company's ability to generate revenue from its investment in fixed assets. A higher ratio is generally preferred as it suggests more efficient utilization of fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also varied, ranging from 0.39 to 0.91. This ratio reflects how effectively the company is generating sales from its total assets. A higher total asset turnover ratio indicates better efficiency in utilizing all assets to generate sales.
In 2023, the fixed asset turnover ratio decreased to 1.28 from 1.64 in 2022, potentially indicating a slight reduction in the efficiency of generating sales from fixed assets. However, the total asset turnover also declined to 0.75 from 0.91 in 2022. This suggests a decrease in the company's overall ability to generate sales from all assets in 2023.
Overall, while the fixed asset turnover has shown some variability, the total asset turnover has depicted a more consistent trend of improvement in recent years. Chevron Corp. may need to focus on optimizing the utilization of both fixed and total assets to enhance its revenue generation capabilities in the long term.