Targa Resources Inc (TRGP)

Short-term

Turnover ratios

1. Inventory Turnover:
Targa Resources Corp's inventory turnover has shown some fluctuation over the past five years. The ratio measures how many times the company's inventory is sold and replaced during the year. In 2021, the inventory turnover was at its highest at 89.50, indicating that the company was able to sell and replace its inventory almost 90 times during that year. This high turnover suggests efficient inventory management. However, in 2023, the ratio decreased to 28.74, indicating a slower rate of inventory turnover compared to 2021 but still relatively efficient.

2. Receivables Turnover:
The receivables turnover ratio measures how efficiently a company is collecting on its credit sales. Targa Resources Corp's receivables turnover has shown a generally declining trend over the past five years. In 2022, the ratio peaked at 14.86, suggesting that the company collected its receivables almost 15 times during that year. However, by 2023, this ratio decreased to 10.92, indicating a slower rate of collecting receivables. This may be a sign that the company is facing challenges in collecting payments from its customers efficiently.

3. Payables Turnover:
The payables turnover ratio measures how many times a company pays off its accounts payable during a certain period. Targa Resources Corp's payables turnover has also shown variability over the years. The ratio peaked in 2022 at 11.65, indicating that the company paid off its accounts payable almost 12 times during that year. In 2023, the ratio decreased to 6.78, suggesting a slower rate of paying off accounts payable compared to the previous year. This may indicate changes in the company's payment policies or supplier relationships.

4. Working Capital Turnover:
Unfortunately, the information for Targa Resources Corp's working capital turnover is missing for all the years provided. This ratio would typically measure how effectively the company is utilizing its working capital to generate sales revenue. Without this data, it is challenging to assess the company's efficiency in converting working capital into sales.

In conclusion, Targa Resources Corp's activity ratios reflect fluctuations and trends in its efficiency in managing inventory, collecting receivables, and paying off payables over the past five years. The company's inventory turnover and payables turnover have shown variability, while the receivables turnover has declined over time. Monitoring these activity ratios can provide insights into Targa Resources Corp's operational efficiency and potential areas for improvement.

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Average number of days

The activity ratios of Targa Resources Corp indicate the effectiveness of the company's management in managing its inventory, accounts receivable, and accounts payable during the past five years.

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand have shown fluctuations over the years. In 2023, the company had 12.70 days of inventory on hand, which indicates that the company held inventory for an average of 12.70 days before selling it. This can be considered a high level of inventory relative to the previous years.
- The increase in inventory days from 4.08 days in 2021 to 12.70 days in 2023 may suggest inefficiencies in inventory management or changes in business operations that have increased the level of inventory on hand.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding measure how long it takes for the company to collect payments from customers. In 2023, Targa Resources Corp had a DSO of 33.43 days, indicating that it took an average of 33.43 days to collect receivables from customers.
- There has been some fluctuation in DSO over the years, with a peak in 2020 at 38.12 days. Overall, the DSO seems to have improved in 2023 compared to the previous years, suggesting more efficient accounts receivable management.

3. Number of Days of Payables:
- The number of days of payables represents how long it takes the company to pay its suppliers. In 2023, Targa Resources Corp had 53.84 days of payables, indicating that the company took an average of 53.84 days to pay its suppliers.
- The number of days of payables has shown an increasing trend over the years, from 31.32 days in 2022 to 53.84 days in 2023. This increase may suggest that the company is taking longer to settle its payables, which can have implications for supplier relationships and cash flow management.

In summary, the analysis of Targa Resources Corp's activity ratios reveals fluctuations and trends in inventory management, accounts receivable collection, and accounts payable periods over the past five years. These ratios provide insights into the company's operational efficiency and financial performance.

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Long-term

The fixed asset turnover ratio for Targa Resources Corp has shown fluctuating trends over the past five years. In 2023, the fixed asset turnover ratio decreased to 1.02 from 1.47 in 2022 but remained relatively consistent with the ratios observed in 2021 and 2020. This ratio indicates that the company is generating $1.02 in revenue for every dollar invested in fixed assets. The decreasing trend in 2023 suggests that the company may not be utilizing its fixed assets as efficiently as in the previous year.

In contrast, the total asset turnover ratio for Targa Resources Corp has also fluctuated but generally improved over the past five years. In 2023, the total asset turnover ratio decreased to 0.78 from 1.07 in 2022, indicating that the company generated $0.78 in revenue for every dollar of total assets. Despite the decline in 2023, the total asset turnover ratio has shown an overall positive trend, reflecting improved efficiency in generating revenue from its total asset base.

Overall, while the fixed asset turnover ratio fluctuated in 2023, the total asset turnover ratio exhibited a more positive trend. Targa Resources Corp should continue to monitor and analyze these ratios to assess the efficiency of its long-term asset utilization and strive for improvements in operational efficiency.