Valero Energy Corporation (VLO)

Short-term

Turnover ratios

Valero Energy Corporation's activity ratios indicate the efficiency of its operations in managing inventory, receivables, payables, and working capital turnover over the years.

- Inventory Turnover: The inventory turnover ratio has improved steadily from 10.88 in 2020 to 16.12 in 2024. This indicates that Valero Energy is managing its inventory more effectively, with goods being sold and replaced more frequently in recent years.

- Receivables Turnover: The absence of data for receivables turnover suggests that there is no available information on how quickly Valero Energy collects payment from its customers. This makes it difficult to assess the efficiency of the company in managing its accounts receivable.

- Payables Turnover: Similar to receivables turnover, the lack of data on payables turnover means there is no clear insight into how quickly the company is paying its suppliers. Without this information, it is challenging to evaluate Valero Energy's management of its accounts payable.

- Working Capital Turnover: The working capital turnover ratio fluctuates between 9.89 in 2020 and 26.44 in 2022, then stabilizing around 15.37-15.76 in the following years. A higher turnover ratio indicates efficient use of working capital to generate sales. Valero Energy has shown varying levels of efficiency in utilizing its working capital over the years.

Overall, based on the available data, Valero Energy Corporation has demonstrated improvements in managing inventory turnover and working capital turnover, but the lack of information on receivables and payables turnover limits a comprehensive analysis of the company's activity ratios.

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Average number of days

Based on the provided data on Valero Energy Corporation's activity ratios, we can analyze the following:

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand decreased from 33.54 days as of December 31, 2020, to 20.62 days as of December 31, 2021, indicating that the company managed its inventory more efficiently by reducing the number of days it takes to sell its inventory.
- Subsequently, the DOH further decreased to 15.44 days as of December 31, 2022, reflecting an even stronger inventory management performance.
- However, there was a slight increase in the DOH to 20.99 days by December 31, 2023, followed by a moderate increase to 22.64 days by December 31, 2024. These increases suggest a potential slowing down in inventory turnover efficiency.

2. Days of Sales Outstanding (DSO):
- The DSO data is not available for any of the periods provided, which indicates that we currently do not have information on how long it takes for Valero Energy Corporation to collect its accounts receivable.

3. Number of Days of Payables:
- Similarly, the number of days of payables data is not available for any of the periods provided, meaning that we lack data on how long Valero Energy Corporation takes to pay its suppliers.

In summary, based on the available data, Valero Energy Corporation has shown improvement in managing its inventory efficiently over the years, as reflected in the decreasing trend of days of inventory on hand. However, without information on days of sales outstanding and number of days of payables, a comprehensive analysis of the company's full working capital management cycle is limited.

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See also:

Valero Energy Corporation Short-term (Operating) Activity Ratios

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. Valero Energy Corporation's fixed asset turnover has shown a significant increase over the past few years, from 2.05 in 2020 to 5.50 in 2022. This indicates that the company has been able to generate more revenue per dollar of fixed assets invested, reflecting improved asset utilization and operational efficiency.

On the other hand, the total asset turnover ratio reflects how efficiently a company is utilizing all its assets to generate sales. Valero Energy Corporation's total asset turnover has also displayed an increasing trend, from 1.25 in 2020 to 2.16 in 2024. This indicates that the company has been able to generate more sales relative to its total assets over the years, demonstrating improved overall asset utilization and productivity.

Overall, the increasing trends in both fixed asset turnover and total asset turnover ratios suggest that Valero Energy Corporation has been effectively managing and utilizing its assets to drive revenue growth and operational performance over the analyzed period.

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See also:

Valero Energy Corporation Long-term (Investment) Activity Ratios