SM Energy Co (SM)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and generating revenue. Let's analyze the activity ratios of SM Energy Co based on the provided data:

1. Inventory Turnover:
- Inventory turnover measures how many times a company sells and replaces its inventory over a period. The trend for SM Energy Co's inventory turnover shows significant fluctuations. It started at a relatively low 2.97 in March 31, 2020, peaked at 136.40 in March 31, 2022, and then decreased to 22.22 by December 31, 2023. This could indicate changes in demand, inventory management, or production efficiency.

2. Receivables Turnover:
- Receivables turnover ratio reflects how well a company collects payments from customers. The absence of data for receivables turnover for SM Energy Co suggests a lack of information or potentially low importance of accounts receivable within the company's operations.

3. Payables Turnover:
- Payables turnover ratio shows how quickly a company pays its suppliers or vendors. Similar to receivables turnover, the lack of data indicates a limited view of the company's payment practices to suppliers.

4. Working Capital Turnover:
- Working capital turnover ratio assesses how efficiently a company utilizes its working capital to generate sales revenue. SM Energy Co's working capital turnover went from 6.64 in March 31, 2020, to 14.16 in June 30, 2024, with fluctuations in between. The increase in this ratio generally indicates improved efficiency in utilizing working capital to generate revenues.

In summary, while the inventory turnover and working capital turnover ratios provide some insights into SM Energy Co's operational efficiency and asset management, the lack of data for receivables and payables turnover limits a comprehensive assessment of the company's overall activity management. Further analysis of these ratios in conjunction with other financial metrics would provide a more complete evaluation of SM Energy Co's performance.

---

Average number of days

Based on the provided data for SM Energy Co, the activity ratios are as follows:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand for SM Energy Co have shown a decreasing trend over the periods presented. From a high of 122.86 days on March 31, 2020, the DOH has steadily decreased to 14.51 days on December 31, 2022.
- This indicates that the company is managing its inventory efficiently, with a decreasing number of days worth of inventory on hand over time.

2. Days of Sales Outstanding (DSO):
- The data for Days of Sales Outstanding is not provided for any of the periods, suggesting that there is no information available to calculate this ratio.
- Without this information, it is not possible to assess how quickly SM Energy Co is collecting its accounts receivable.

3. Number of Days of Payables:
- Similar to DSO, data for the number of days of payables is not provided for any of the periods, indicating a lack of information on the company's payment practices.
- Without this data, it is challenging to evaluate how efficiently SM Energy Co is managing its accounts payable and managing its cash flow through payment terms.

In conclusion, based on the available information, SM Energy Co appears to be effectively managing its inventory levels by significantly reducing days of inventory on hand over the periods specified. However, the lack of data for Days of Sales Outstanding and Number of Days of Payables limits a comprehensive analysis of the company's overall activity ratios.

---

Long-term

Long-term activity ratios such as Fixed Asset Turnover and Total Asset Turnover provide insights into how efficiently a company is utilizing its assets to generate revenue.

For SM Energy Co, the Fixed Asset Turnover has shown a decreasing trend from 2020 to 2022, indicating that the company is generating less revenue relative to its fixed assets during this period. However, there was a significant improvement in the ratio in the latter half of 2022, reaching its peak at 0.74, suggesting a better utilization of fixed assets. The ratio declined slightly in 2023 but remained relatively stable.

In comparison, the Total Asset Turnover ratio also displayed a decreasing trend from 2020 to 2023, implying a decline in the company's ability to generate sales relative to its total assets. However, there was a slight increase in the ratio in the last two quarters of 2023, indicating a modest improvement in asset utilization.

Overall, the long-term activity ratios of SM Energy Co suggest some fluctuations in asset utilization efficiency over the years, with improvements in certain periods. Monitoring these ratios can provide valuable insights into the company's operational efficiency and potential areas for improvement.