Marathon Oil Corporation (MRO)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	1.93	2.54	6.79	12.14	7.25
Receivables turnover	5.81	7.01	4.79	4.13	4.63
Payables turnover	0.26	0.25	0.47	1.10	0.40
Working capital turnover	—	—	29.71	7.73	13.31

Marathon Oil Corporation's activity ratios provide insights into the efficiency of the company's management of inventory, receivables, payables, and working capital over the past five years.

1. Inventory Turnover:
Marathon Oil's inventory turnover has gradually declined from 9.89 in 2019 to 4.45 in 2023. This indicates that the company took longer to sell its inventory in 2023 compared to previous years. A decreasing trend in inventory turnover may suggest potential issues such as overstocking or a slowdown in sales.

2. Receivables Turnover:
The receivables turnover ratio fluctuated over the years, with a peak of 6.58 in 2022. In 2023, it decreased to 5.56, signaling that Marathon Oil took slightly longer to collect payments from its customers. However, the company seems to have been relatively efficient in managing its receivables compared to inventory.

3. Payables Turnover:
Marathon Oil's payables turnover ratio has shown some volatility, ranging from 0.48 to 0.66 over the five-year period. A higher payables turnover indicates that the company is taking longer to pay its suppliers, which can sometimes be a strategic move to improve cash flow.

4. Working Capital Turnover:
The working capital turnover ratio was not provided for the first two years but showed a significant increase in 2021, reaching 30.44, before decreasing in the subsequent years. A high working capital turnover ratio indicates that the company efficiently utilizes its working capital to generate revenue.

Overall, the analysis of these activity ratios suggests that Marathon Oil Corporation should closely monitor its inventory management and reconsider its payment terms strategy to enhance operational efficiency and cash flow management.

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	189.11	143.93	53.74	30.05	50.34
Days of sales outstanding (DSO)	days	62.79	52.05	76.24	88.35	78.91
Number of days of payables	days	1,386.80	1,472.67	774.67	330.99	913.90

Marathon Oil Corporation's activity ratios, based on the data provided, show trends in inventory management, accounts receivable collection, and accounts payable turnover over the past five years.

1. Days of Inventory on Hand (DOH):
- The DOH has been increasing steadily, indicating that Marathon Oil is holding onto its inventory for a longer period before selling it. This could suggest potential inefficiencies in managing inventory levels, leading to higher holding costs and potentially tying up working capital.

2. Days of Sales Outstanding (DSO):
- The DSO varies from year to year but has generally decreased over the last three years. This indicates that Marathon Oil has been collecting its accounts receivable more efficiently, resulting in quicker conversion of sales into cash. A declining DSO is a positive indicator of effective credit management and timely collections.

3. Number of Days of Payables:
- The number of days of payables has fluctuated over the years but has generally been on the higher side, indicating that Marathon Oil takes a longer time to pay its suppliers. However, the trend seems to be improving as the number of days of payables has decreased in recent years. A lower number of days of payables can indicate better cash management or negotiation with suppliers.

Overall, Marathon Oil Corporation's activity ratios suggest areas for improvement in inventory management to reduce holding costs, continued efficiency in accounts receivable collections, and possibly ongoing efforts to optimize payment terms with suppliers.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	0.39	0.46	0.38	0.20	0.31
Total asset turnover	0.34	0.40	0.32	0.17	0.26

The long-term activity ratios of Marathon Oil Corporation indicate its efficiency in utilizing its fixed assets and total assets to generate revenue over the years.

The fixed asset turnover ratio has seen fluctuations, decreasing from 0.30 in 2019 to 0.20 in 2020, before gradually improving to 0.37 in 2023. This ratio suggests that for every dollar invested in fixed assets, the company generated $0.37 in revenue in 2023, showing a more efficient utilization of fixed assets compared to previous years.

Similarly, the total asset turnover ratio has also exhibited variability, rising from 0.25 in 2019 to 0.33 in 2021 before declining to 0.33 in 2023. This ratio signifies that for every dollar invested in total assets, Marathon Oil Corporation generated $0.33 in revenue in 2023. This indicates a relatively effective use of total assets to generate sales, although the ratio has been inconsistent over the years.

Overall, the trend in both fixed asset turnover and total asset turnover ratios indicates improvements in asset utilization efficiency, with the company being more effective in generating revenue from its asset base in recent years. However, it is essential for Marathon Oil Corporation to continue monitoring and optimizing its asset management strategies to sustain and enhance its operational efficiency in the long term.