Hess Corporation (HES)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.14 | 2.85 | 1.96 | 6.84 | 2.26 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | 1.62 | 2.17 | 1.99 | 12.94 | 1.44 |
| Working capital turnover | 65.69 | 7.38 | 5.91 | 3.29 | 10.08 |
The activity ratios of Hess Corporation provide insights into the efficiency of the company's operations in managing inventory, receivables, payables, and working capital over the past five years.
1. Inventory Turnover:
Hess Corporation reported an inventory turnover ratio of 0.00 for each year from 2019 to 2023. This indicates that the company has not been effectively managing its inventory levels or has a low volume of sales relative to its inventory holdings. A consistently low or zero inventory turnover ratio may suggest overstocking of inventory or challenges in selling products efficiently.
2. Receivables Turnover:
The receivables turnover ratio for Hess Corporation has shown variability over the past five years, ranging from 5.43 to 9.75. A higher receivables turnover ratio signifies that the company is collecting its accounts receivable more frequently within a year, indicating efficient management of credit sales and collection processes. The improvement in this ratio from 2019 to 2022 is a positive trend indicating better management of receivables.
3. Payables Turnover:
Hess Corporation reported a payables turnover ratio of 0.00 for each year from 2019 to 2023. A low or zero payables turnover ratio may suggest that the company is not paying its suppliers frequently or facing challenges in managing its accounts payable efficiently.
4. Working Capital Turnover:
The working capital turnover ratio for Hess Corporation has shown significant fluctuations over the past five years, ranging from 3.20 to 65.69. A higher working capital turnover ratio indicates that the company is generating sales more efficiently with its working capital. The significant increase in 2023 compared to previous years could suggest improvements in the company's working capital management and operational efficiency.
In conclusion, while Hess Corporation has shown improvements in managing its receivables and working capital turnover ratios, the company needs to focus on addressing its inventory and payables turnover ratios to enhance operational efficiency and optimize its working capital management further.
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 | 170.71 | 127.96 | 186.26 | 53.33 | 161.47 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 225.74 | 168.05 | 183.75 | 28.22 | 254.26 |
The Days Sales Outstanding (DSO) ratio for Hess Corporation has shown some fluctuations over the past five years. In 2023, the DSO decreased to 46.18 days from 37.45 days in 2022, indicating that the company is collecting its accounts receivable more efficiently. However, in 2021 and 2020, the DSO was higher at 59.15 days and 67.26 days respectively, suggesting that it took the company longer to collect its receivables during those years.
Unfortunately, the data for Days of Inventory on Hand and Number of Days of Payables is not available, making it difficult to provide a comprehensive analysis of Hess Corporation's liquidity and efficiency in managing inventory and payables.
Overall, it would be valuable to have additional information on inventory turnover and accounts payable turnover to gain a clearer picture of the company's operational efficiency and working capital management.
See also:
Hess Corporation 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 | 0.60 | 0.75 | 0.53 | 0.34 | 0.39 |
| Total asset turnover | 0.44 | 0.52 | 0.37 | 0.26 | 0.30 |
The long-term activity ratios of Hess Corporation provide insights into the effectiveness of the company in generating revenues relative to its fixed assets and total assets over the past five years.
The fixed asset turnover ratio has fluctuated over the period, indicating varying levels of efficiency in utilizing fixed assets to generate sales. In 2023, the ratio of 0.60 suggests that for every dollar invested in fixed assets, the company generated $0.60 in revenue. This is a slight decrease from the previous year but remains relatively stable compared to earlier periods. The improvement in the ratio from 2020 to 2023 indicates enhanced efficiency in utilizing fixed assets to drive sales.
On the other hand, the total asset turnover ratio reflects overall efficiency in generating sales from all assets, including both fixed and current assets. The trend shows a relatively consistent improvement from 2019 to 2023, with the ratio increasing from 0.30 to 0.44. This suggests that the company has become more effective in utilizing its total assets to generate revenue over the years.
In conclusion, while there have been fluctuations in the fixed asset turnover ratio, Hess Corporation has shown steady progress in improving its overall asset turnover efficiency. This indicates positive operational performance and better utilization of assets to drive sales growth over the past five years.