Valero Energy Corporation (VLO)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	17.39	23.64	17.69	10.87	14.76
Receivables turnover	11.51	14.75	10.91	10.63	12.05
Payables turnover	10.49	12.54	8.87	10.79	10.15
Working capital turnover	15.31	26.36	26.25	9.89	18.65

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate revenues. Let's analyze the activity ratios of Valero Energy Corp. based on the provided data:

1. Inventory turnover:
Valero Energy Corp.'s inventory turnover has fluctuated over the past five years, ranging from 9.76 in 2020 to 22.33 in 2022. A higher inventory turnover indicates that the company is selling its inventory more quickly, which can be seen as a positive sign of efficiency in managing inventory levels.

2. Receivables turnover:
The receivables turnover ratio reflects how well Valero Energy Corp. collects its accounts receivable. The company's receivables turnover has ranged from 10.63 in 2020 to 14.80 in 2022. A higher ratio indicates that the company is more efficient in collecting payments from its customers.

3. Payables turnover:
The payables turnover ratio indicates how quickly Valero Energy Corp. pays its suppliers. The payables turnover has varied from 8.22 in 2021 to 11.85 in 2022. A higher payables turnover ratio suggests that the company is managing its payments effectively, potentially improving supplier relationships.

4. Working capital turnover:
The working capital turnover ratio measures how effectively Valero Energy Corp. is utilizing its working capital to generate revenue. The company's working capital turnover has fluctuated, with the highest being 26.44 in 2022. A higher ratio indicates that the company is efficiently using its working capital to generate sales.

Overall, the analysis of these activity ratios indicates that Valero Energy Corp. has shown fluctuations in its efficiency in managing inventory, accounts receivable, accounts payable, and working capital over the past five years. It is essential for the company to continuously monitor and improve these ratios to enhance operational efficiency and profitability.

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	20.99	15.44	20.63	33.57	24.72
Days of sales outstanding (DSO)	days	31.70	24.74	33.45	34.35	30.29
Number of days of payables	days	34.79	29.11	41.14	33.81	35.97

Based on the activity ratios of Valero Energy Corp. over the past five years:

1. Days of Inventory on Hand (DOH):
- Valero's DOH has shown fluctuations over the years, ranging from 16.35 days in 2022 to 37.41 days in 2020.
- A lower DOH indicates efficient inventory management, as seen in 2022, while a higher DOH suggests inventory buildup, as in 2020.

2. Days of Sales Outstanding (DSO):
- Valero's DSO has varied, with the lowest at 24.66 days in 2022 and the highest at 34.35 days in 2020.
- A lower DSO implies faster collection of receivables, indicating effective credit policies and management, exemplified in 2022.

3. Number of Days of Payables:
- Valero's days of payables have fluctuated, with the lowest at 30.81 days in 2022 and the highest at 44.40 days in 2021.
- A higher number of days of payables suggests that the company takes longer to pay its suppliers, which can be beneficial for cash flow management, as observed in 2021.

Overall, Valero Energy Corp. has experienced varying levels of efficiency in managing its inventory, receivables, and payables over the past five years, reflecting different aspects of its working capital management.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	5.15	6.13	3.91	2.26	3.70
Total asset turnover	2.29	2.88	1.96	1.25	2.01

Valero Energy Corp.'s long-term activity ratios provide insights into its efficiency in utilizing fixed assets and total assets to generate revenue over the years. The fixed asset turnover ratio indicates that the company generated $4.79 of revenue for every dollar invested in fixed assets in 2023, which is a decrease from the previous year's $5.69. This may indicate a potential decline in the efficiency of utilizing fixed assets to generate sales.

Furthermore, the total asset turnover ratio reveals that Valero Energy Corp. generated $2.30 in revenue for every dollar invested in total assets in 2023, a decrease from the previous year's $2.89. This suggests a decrease in the overall efficiency of utilizing all assets to generate sales.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios over the past few years may indicate potential inefficiencies in asset utilization within the company. Further investigation into the factors influencing these ratios, such as changes in production processes, asset management strategies, or overall market conditions, would be necessary to fully understand the implications for Valero Energy Corp.'s long-term financial performance.