Murphy Oil Corporation (MUR)

Short-term

Turnover ratios

The activity ratios for Murphy Oil Corp. provide insights into the efficiency of the company's operations in managing its inventory, receivables, and payables.

1. Inventory turnover: This ratio shows the number of times a company sells and replaces its inventory during a specific period. Murphy Oil Corp.'s inventory turnover has been declining over the quarters, suggesting a decrease in the efficiency of selling its inventory. The company's Q4 2023 inventory turnover of 0.95 indicates that its inventory took approximately 0.95 quarters to be sold during that period.

2. Receivables turnover: This ratio measures how effectively a company collects cash from its customers. Murphy Oil Corp. has shown relatively consistent receivables turnover ratios over the quarters, indicating that it efficiently collects cash from customers. A higher turnover is indicative of a faster collection of receivables.

3. Payables turnover: This ratio evaluates how quickly a company pays off its suppliers. Murphy Oil Corp. has maintained a stable payables turnover ratio over the quarters. A lower payables turnover ratio may indicate that the company is taking longer to pay its suppliers, potentially signaling favorable credit terms.

4. Working capital turnover: Working capital turnover is the ratio of sales to working capital and provides insight into how efficiently a company utilizes its working capital to generate revenue. Unfortunately, the data for working capital turnover is not provided.

In summary, Murphy Oil Corp. has exhibited varying levels of efficiency in managing its inventory, receivables, and payables over the quarters. Further analysis and comparison with industry benchmarks are essential to gain a more comprehensive understanding of the company's operational efficiency and effectiveness in managing its resources.

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Average number of days

Activity ratios provide insight into how efficiently a company is managing its resources. Let's analyze the activity ratios of Murphy Oil Corp. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows an improvement from Q1 2022 to Q4 2023, indicating that the company has been able to reduce the number of days it holds inventory.
- The sharp increase in DOH from Q1 2022 to Q2 2022 followed by a decline suggests some inconsistencies in managing inventory levels during that period.
- Overall, the downward trend in DOH is positive as it implies better inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- DSO measures how quickly the company collects revenue from its credit sales. A lower DSO is generally considered favorable.
- Murphy Oil Corp. has shown fluctuating DSO values over the quarters, with Q1 2023 and Q4 2022 having the lowest values amongst all the quarters analyzed.
- A decrease in DSO indicates that the company is collecting revenue more efficiently, although the fluctuations suggest possible variability in the collection process.

3. Number of Days of Payables:
- This ratio reflects how long the company takes to pay its suppliers. A higher number of days indicates a longer payable period.
- Murphy Oil Corp. has experienced significant variations in the number of days of payables over the quarters, with Q1 2022 and Q1 2023 having the lowest values, and Q1 2022 and Q2 2022 recording exceptionally high values.
- The fluctuating trend in the number of days of payables may suggest changing relationships with suppliers or shifts in payment terms.

Overall, the analysis of activity ratios for Murphy Oil Corp. indicates improvements in inventory management efficiency, fluctuations in collection processes, and variability in the company's payment practices. It is essential for the company to maintain a balance between efficient inventory management, timely collection of revenue, and managing payables effectively to ensure sustainable operations.

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Long-term

The fixed asset turnover ratio for Murphy Oil Corp. has fluctuated over the past eight quarters, ranging from 0.30 to 0.50. This ratio measures the efficiency of the company in generating revenue from its fixed assets. A higher ratio indicates better utilization of fixed assets to generate sales.

On the other hand, the total asset turnover ratio has also varied during the same period, with values between 0.23 and 0.41. This ratio reflects how efficiently the company is using all its assets to generate sales. A higher total asset turnover ratio suggests that Murphy Oil is effectively utilizing its total assets to generate revenue.

Overall, the trend in both the fixed asset turnover and total asset turnover ratios shows some fluctuations, indicating changes in the company's efficiency in generating sales from its assets. Further analysis and comparison with industry benchmarks would provide more insights into Murphy Oil Corp.'s long-term activity performance.