SM Energy Co (SM)

Working capital turnover

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Revenue US$ in thousands 2,373,890 3,358,650 2,622,890 1,126,670 1,590,100
Total current assets US$ in thousands 916,439 737,203 613,187 203,669 252,634
Total current liabilities US$ in thousands 633,812 598,584 889,327 583,739 472,043
Working capital turnover 8.40 24.23 — — —

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,373,890K ÷ ($916,439K – $633,812K)
= 8.40

Working capital turnover is a financial ratio that measures a company's efficiency in managing its working capital to generate sales. A higher working capital turnover ratio indicates that the company is able to efficiently use its working capital to generate revenue.

Looking at the data for SM Energy Co, the working capital turnover ratio has fluctuated significantly over the years. In 2023, the working capital turnover was 8.40, which suggests that the company generated $8.40 in sales for every $1 of working capital. This represents a decrease from the previous year, where the ratio was 24.23.

The sharp decline in the working capital turnover ratio from 2022 to 2023 could signal inefficiencies in the company's working capital management or a decrease in sales relative to its working capital. Further analysis would be needed to understand the reasons behind this decline and determine any potential implications for the company's financial performance and liquidity.