Matador Resources Company (MTDR)

Short-term

Turnover ratios

Matador Resources Company's inventory turnover has fluctuated significantly over the past five years, indicating varying efficiency in managing inventory levels. The ratio decreased from 71.05 in 2020 to 5.98 in 2023 before slightly increasing to 8.14 in 2024. This suggests that the company might have experienced challenges in effectively converting inventory into sales during the period.

In terms of receivables turnover, the company has maintained a relatively stable performance, with the ratio hovering around 6 to 7 in the past few years. This indicates that Matador Resources has been efficient in collecting payments from customers, as the ratio reflects the number of times receivables are collected within a year.

On the other hand, the payables turnover ratio has been declining steadily from 53.78 in 2020 to 2.13 in 2024. This suggests that the company is taking longer to pay its suppliers over the years, which may impact its relationships with vendors and overall liquidity position.

The working capital turnover ratio was not provided for 2020 and 2021 but stood at 6.17 in 2022 and an impressive 91.73 in 2023. This sharp increase in 2023 indicates that the company effectively utilized its working capital to generate sales revenue. However, the absence of data for 2020, 2021, and 2024 makes it challenging to assess the company's trend in optimizing working capital in those years.

Overall, Matador Resources Company should focus on optimizing its inventory and payables management to enhance operational efficiency and maintain healthy relationships with both suppliers and customers.

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Average number of days

Matador Resources Company's activity ratios depict the efficiency of the company in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The DOH ratio indicates how many days, on average, the company holds inventory before it is sold. Matador Resources Company experienced a significant increase in its DOH from 5.14 days in 2020 to 61.06 days in 2023 before slightly decreasing to 44.82 days in 2024.
- The rise in DOH can indicate potential issues such as overstocking or slowing sales, which may lead to higher carrying costs and lower liquidity.

2. Days of Sales Outstanding (DSO):
- DSO measures the average number of days it takes for the company to collect payment after a sale. Matador Resources Company saw fluctuations in its DSO over the years, ranging from 52.99 days in 2021 to 68.18 days in 2024.
- A higher DSO can suggest delays in collecting receivables, impacting cash flow and liquidity. It is important for the company to manage its credit policies efficiently to reduce DSO.

3. Number of Days of Payables:
- This ratio reflects how long the company takes to pay its suppliers. Matador Resources Company exhibited a significant increase in its payable turnover period from 6.79 days in 2020 to 171.42 days in 2024.
- A longer payment period may indicate liquidity issues, strained supplier relationships, or potential financial distress.

Overall, the analysis of Matador Resources Company's activity ratios indicates the need for the company to focus on optimizing inventory management, enhancing accounts receivable collection processes, and maintaining balanced payment terms with its suppliers to improve operational efficiency and financial performance.

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Long-term

Long-term activity ratios such as fixed asset turnover and total asset turnover provide insights into how effectively Matador Resources Company is utilizing its assets to generate revenue.

Fixed asset turnover, which measures the efficiency of the company in generating sales from its fixed assets, shows an increasing trend from 0.26 in December 31, 2020, to 0.69 in December 31, 2022. This indicates that Matador Resources Company has been able to generate more sales revenue per dollar of fixed assets over this period. However, there is a slight decrease to 0.40 in December 31, 2023, and further to 0.36 in December 31, 2024, suggesting a potential decrease in efficiency in utilizing fixed assets in those years.

Total asset turnover, which indicates the efficiency of the company in generating sales from all assets, also shows an increasing trend from 0.23 in December 31, 2020, to 0.55 in December 31, 2022. This suggests that Matador Resources Company has improved its overall asset utilization during this period. However, there is a decrease to 0.36 in December 31, 2023, and further to 0.32 in December 31, 2024, indicating potential challenges in generating sales in relation to total assets in those years.

In summary, while the fixed asset turnover and total asset turnover ratios show improvements in asset utilization efficiency from 2020 to 2022, there are signs of potential decline in the subsequent years. Matador Resources Company may need to further analyze the underlying reasons for these changes and make strategic adjustments to enhance its long-term asset management and revenue generation capabilities.