Patterson-UTI Energy Inc (PTEN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.75 | 1.83 | 3.43 | 16.13 | 5.07 |
| Receivables turnover | 4.10 | 4.63 | 3.70 | 6.62 | 6.89 |
| Payables turnover | 0.59 | 0.51 | 0.76 | 5.86 | 1.08 |
| Working capital turnover | 9.41 | 9.41 | 8.91 | 5.34 | 10.32 |
Patterson-UTI Energy Inc's activity ratios provide insights into how efficiently the company manages its assets and operations. Here is a detailed analysis based on the data provided:
1. Inventory Turnover:
- Inventory turnover reflects how quickly the company is selling its inventory. A higher ratio indicates efficient inventory management.
- Patterson-UTI Energy Inc's inventory turnover has fluctuated over the years but generally shows a trend of healthy turnover, with the highest being in 2019 at 46.61 times.
- The declining trend since 2019 may suggest a slower movement of inventory, which could tie up capital and impact profitability.
2. Receivables Turnover:
- Receivables turnover measures how quickly the company collects its accounts receivable. A higher ratio implies effective credit and collection policies.
- Patterson-UTI Energy Inc's receivables turnover has varied over the years, with a slight decrease from 2022 to 2023.
- The company may need to focus on improving collections to ensure a steady inflow of cash and reduce the risk of bad debts.
3. Payables Turnover:
- Payables turnover demonstrates how quickly the company pays its suppliers. A higher ratio indicates efficient cash management.
- Patterson-UTI Energy Inc's payables turnover has shown fluctuations but generally reflects a reasonable turnover rate, with a gradual decrease in recent years.
- A lower payables turnover may suggest either an extension in payment terms with suppliers or potential cash flow constraints that need attention.
4. Working Capital Turnover:
- Working capital turnover measures how effectively the company utilizes its working capital to generate revenue. A higher ratio suggests efficient working capital management.
- Patterson-UTI Energy Inc's working capital turnover has been relatively stable over the years, indicating consistent utilization of working capital to generate sales.
- The company's ability to maintain a steady working capital turnover signifies its operational efficiency in using available funds to support business activities and generate revenue.
In conclusion, Patterson-UTI Energy Inc's activity ratios demonstrate various aspects of its operational efficiency and management of assets. Monitoring these ratios over time can help identify trends and areas that may require attention to improve overall business performance.
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 | 208.91 | 198.92 | 106.36 | 22.63 | 72.04 |
| Days of sales outstanding (DSO) | days | 88.93 | 78.86 | 98.74 | 55.12 | 52.96 |
| Number of days of payables | days | 617.49 | 721.30 | 477.64 | 62.26 | 337.81 |
Patterson-UTI Energy Inc's activity ratios reveal fluctuations in its efficiency in managing its inventory, collecting receivables, and paying supplier invoices over the past five years.
1. Days of Inventory on Hand (DOH): Patterson-UTI Energy Inc's inventory turnover has shown varying trends over the period analyzed. In 2023, the company held inventory for approximately 23.84 days before selling it, indicating an increase from the previous year. This may suggest potential issues with inventory management efficiency, leading to higher inventory carrying costs. It is essential for the company to monitor and optimize its inventory levels to improve this ratio.
2. Days of Sales Outstanding (DSO): The Days of Sales Outstanding ratio represents how long it takes for Patterson-UTI Energy Inc to collect its receivables. The company's DSO increased in 2023 compared to the previous year, with the ratio reaching 87.85 days. This may indicate a potential slowdown in collecting payments from customers, which could impact cash flow management. The company should focus on improving its credit and collection processes to shorten this collection period.
3. Number of Days of Payables: Patterson-UTI Energy Inc's Number of Days of Payables ratio reflects the number of days the company takes to pay its suppliers. The ratio increased in 2023 to 70.45 days, indicating that the company is taking longer to pay its bills compared to the previous year. While extending payables can improve cash flow, excessive delays may strain supplier relationships and impact the company's creditworthiness. Patterson-UTI Energy Inc should aim to strike a balance between managing cash flow and maintaining good relationships with suppliers.
Overall, the analysis of Patterson-UTI Energy Inc's activity ratios suggests a need for the company to focus on optimizing its inventory management, enhancing collection practices, and maintaining healthy supplier relationships to improve overall efficiency and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.23 | 1.16 | 0.56 | 0.39 | 0.72 |
| Total asset turnover | 0.55 | 0.83 | 0.45 | 0.33 | 0.54 |
The long-term activity ratios for Patterson-UTI Energy Inc, as represented by the fixed asset turnover and total asset turnover, provide insight into how efficiently the company is utilizing its assets to generate revenue.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures the company's ability to generate sales revenue from its investment in fixed assets such as property, plant, and equipment.
- In 2023, the fixed asset turnover ratio improved to 1.24, indicating that the company generated $1.24 in sales for every $1 invested in fixed assets. This demonstrates an increase in efficiency compared to the previous years.
- The consistent improvement in the fixed asset turnover ratio from 2020 to 2023 suggests that Patterson-UTI Energy Inc enhanced its utilization of fixed assets to generate revenue.
2. Total Asset Turnover:
- The total asset turnover ratio reflects the company's ability to generate sales relative to its total assets, including both fixed and current assets.
- In 2023, the total asset turnover ratio decreased to 0.56, indicating that the company generated $0.56 in sales for every $1 of total assets. This represents a decline in efficiency compared to the prior year.
- Despite the decrease in 2023, the total asset turnover ratio has shown fluctuations over the years, with a general trend of improvement from 2019 to 2022.
Overall, while the fixed asset turnover ratio improved in 2023, the total asset turnover ratio decreased. This may suggest that Patterson-UTI Energy Inc's efficiency in generating sales from fixed assets improved, but its overall efficiency in utilizing all assets for revenue generation declined slightly. Monitoring these ratios over time can provide valuable insights into the company's asset utilization and operational efficiency.