Ovintiv Inc (OVV)

Short-term

Turnover ratios

The data provided shows the activity ratios of Ovintiv Inc over the past five years.

1. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company is able to collect on its credit sales during a specific period.
- Ovintiv Inc's receivables turnover ratio fluctuated significantly over the years, ranging from 5.28 in 2020 to as high as 288.28 in 2022.
- A higher receivables turnover ratio indicates that the company is collecting its accounts receivable more quickly, which is generally a positive sign as it shows effective credit management.

2. Payables Turnover:
- The payables turnover ratio assesses how efficiently a company pays its suppliers.
- Ovintiv Inc's payables turnover ratio is consistently at 0.00 across all five years, indicating that the company is not effectively managing its accounts payable.
- A higher payables turnover ratio is generally preferred as it suggests that the company is paying its bills promptly.

3. Inventory Turnover:
- Unfortunately, the data for inventory turnover is not provided in the table, so we are unable to analyze the efficiency of Ovintiv Inc in managing its inventory levels.

4. Working Capital Turnover:
- The working capital turnover ratio measures how well a company generates revenue relative to its working capital.
- As the data for working capital turnover is missing, it is not possible to assess how effectively Ovintiv Inc utilizes its working capital to generate sales.

In conclusion, based on the data provided, Ovintiv Inc has shown significant fluctuations in its receivables turnover ratio over the past five years, while its payables turnover ratio has remained constant at 0.00. It would be beneficial to have more information, particularly on inventory turnover and working capital turnover, to gain a more comprehensive understanding of the company's operational efficiency.

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Average number of days

Days of sales outstanding (DSO) measures how many days on average it takes for a company to collect revenue after a sale is made. A lower DSO is generally preferred as it indicates faster collection of accounts receivable. Ovintiv Inc's DSO has fluctuated significantly over the past five years, ranging from 1.27 days in 2022 to 69.10 days in 2020. The substantial increase in 2020 may suggest potential issues with accounts receivable management during that period.

Days of inventory on hand (DOH) measures the average number of days it takes for a company to sell its inventory. Unfortunately, the table does not provide data for this ratio for Ovintiv Inc, so analysis on inventory turnover efficiency is not possible based on this data alone.

The number of days of payables outstanding information is not provided in the table, but this ratio typically measures how long it takes a company to pay its suppliers. A longer payment period can indicate favorable liquidity, while a very short period may suggest potential liquidity issues or strained supplier relationships.

In summary, Ovintiv Inc's Days of Sales Outstanding (DSO) shows significant fluctuations over the years, which may indicate varying efficiency in collecting accounts receivable. Unfortunately, without data on Days of Inventory on Hand and the Number of Days of Payables Outstanding, a comprehensive analysis of the company's working capital management is limited.

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Long-term

The long-term activity ratios of Ovintiv Inc, as depicted by the fixed asset turnover and total asset turnover ratios, indicate how efficiently the company is utilizing its assets to generate revenue.

The fixed asset turnover ratio has fluctuated over the past five years, ranging from 0.44 in 2019 to 1.31 in 2022. This ratio measures how effectively the company is using its fixed assets to generate sales. A lower ratio suggests that the company is not efficiently utilizing its fixed assets to generate revenue, while a higher ratio implies better utilization of fixed assets. Ovintiv Inc's fixed asset turnover ratio has been inconsistent, showcasing periods of both efficient and inefficient utilization of its fixed assets.

On the other hand, the total asset turnover ratio has also varied over the years, from 0.31 in 2019 to 0.82 in 2022. This ratio assesses the company's efficiency in generating sales revenue from all its assets. A higher total asset turnover ratio indicates that the company is effectively using all its assets to generate revenue. Ovintiv Inc's total asset turnover ratio has shown improvements over the years, signifying better overall asset utilization to drive sales.

In conclusion, while Ovintiv Inc has experienced fluctuations in its long-term activity ratios, particularly in fixed asset turnover, the company has demonstrated a positive trend in its total asset turnover, suggesting overall improvements in asset utilization efficiency over the years. Further analysis of the company's operational strategies and investment in fixed assets may provide insights into optimizing asset utilization to enhance profitability.