ConocoPhillips (NYSE:COP)

The analysis of the financial ratios over the reported quarters reveals several notable trends reflecting the company’s operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio shows a general upward trend from 18.75 to a peak of 64.39, indicating increasing efficiency in managing inventory over time. After reaching this peak, the ratio declined steadily to 30.26 and stabilized around this level. This pattern suggests the company initially improved inventory management significantly but experienced some easing in turnover rates in the latest periods.

Receivables Turnover

The receivables turnover ratio fluctuated moderately, beginning near 6.82, peaking at 14.73, and then settling around 8 to 11 in the later quarters. This indicates some variability in the collection efficiency of receivables, with periods of both improvement and slight deterioration, but generally maintaining a moderate turnover level.

Payables Turnover

The payables turnover ratio increased from 6.96 up to 14.81, which implies quicker payment to suppliers, before declining to around 7.81 by the last recorded period. This indicates a trend toward faster payment initially, followed by a slowdown, possibly reflecting changes in cash management or supplier terms.

Working Capital Turnover

This ratio showed strong growth from 2.8 to a high of 17.16, indicating enhanced efficiency in using working capital to generate revenue. Although there was some fluctuation, with a minor dip after the peak, the overall trend remains positive, suggesting improved working capital utilization.

Average Inventory Processing Period

The average inventory processing days declined sharply from 19 to a low of around 6 days, reflecting faster inventory turnover, then gradually increased to approximately 12 days in the most recent quarters. This pattern aligns with the inventory turnover trend, showing initial efficiency gains followed by a slight reversal.

Average Receivable Collection Period

The average receivable collection period saw volatility, starting at 54 days, rising to around 73 days, then decreasing steadily to mid-20s, before increasing again to 45 days late in the timeline. This indicates periods of slower collection intermixed with improved collection efficiency, reflecting possible shifts in credit policies or customer payment behaviors.

Operating Cycle

The operating cycle generally shortened from 73 days to about 32 days at its best, then lengthened to approximately 57 days before improving slightly. This suggests initial improvements in the entire cash-to-cash cycle, followed by some extension in duration, which might affect liquidity.

Average Payables Payment Period

The average payables payment period decreased from 52 days to a minimum near 25 days, before increasing again to 47 days towards the end. This pattern implies fluctuating supplier payment timing, potentially balancing between supplier relationships and cash flow management.

Cash Conversion Cycle

The cash conversion cycle declined from 21 days to as low as 6 days, indicating improved efficiency in converting investments in inventory and receivables back into cash. Periodic increases occurred but the cycle generally remained under 20 days, demonstrating effective working capital management.

Overall, the data depicts a period of significant operational improvements in inventory and working capital management, with transient fluctuations in receivables and payables collection/payment periods. The company appears to have optimized its cash conversion cycle markedly, though recent trends show a slight deceleration in some efficiency metrics, warranting close monitoring in future periods.

The quarterly financial data reveals several notable trends across sales, inventories, and inventory turnover ratios over the examined periods.

Sales and Other Operating Revenues

Sales exhibited significant volatility initially, with a marked dip in the second quarter of 2020, corresponding to broader economic disruptions that affected revenue streams. Following this low, there was a robust recovery through 2021 and into early 2022, peaking in the second quarter of 2022. After reaching this peak, sales displayed a gradual decline through 2023, followed by a moderate rebound in the final quarters up to the first quarter of 2025. This pattern indicates sensitivity to market conditions, with strong recovery and subsequent fluctuations possibly influenced by changes in commodity prices or operational capacity.

Inventories

Inventory levels show a general upward trend across the entire timeframe. Beginning at relatively moderate levels in early 2020, inventories increased steadily with slight fluctuations, reflecting either accumulation due to cautious supply chain management or preparation for anticipated sales growth. The most substantial increases occurred towards the end of the period, especially from 2023 onwards, indicating possibly increased stockpiling or slower inventory turnover during these quarters.

Inventory Turnover Ratio

The inventory turnover ratio displays an increasing trend from 2020 through the end of 2022, indicating improved efficiency in managing inventory relative to sales volumes. The ratio peaked towards the end of 2022 and then reversed trend starting in 2023, showing a gradual decline through to early 2025. This decline suggests that, despite generally higher inventory levels, the company’s efficiency in converting inventory into sales diminished in more recent quarters, pointing to potential challenges in demand or inventory management effectiveness.

Overall, the data suggests an initial period of low sales and moderate inventory levels with improving operational efficiency through 2022. However, post-2022, the trend shows an increase in inventory backlogs accompanied by a decrease in turnover ratios, highlighting emerging inefficiencies or demand slowdowns that may warrant closer operational review and strategic adjustments.

The financial data displays several notable trends over the periods from March 2020 through March 2025. The analysis covers sales and revenues along with accounts receivable and receivables turnover ratios.

Sales and Other Operating Revenues

Sales revenue experienced a significant decline in the early quarters of 2020, reaching a low point at June 30, 2020, with approximately 2,749 million USD. Following this, revenues showed a steady recovery through 2021 and peaked substantially at December 31, 2021, with 15,120 million USD. The upward trend continued into 2022, with revenues exceeding 21,000 million USD in the middle quarters, although a slight contraction appeared towards the end of 2022 and into early 2023. Subsequently, sales dipped notably in mid-2023 to around 12,351 million USD but demonstrated some recovery by the final quarter of 2024 and early 2025, reaching 16,517 million USD by March 31, 2025.

Accounts and Notes Receivable, Net

The accounts and notes receivable followed a somewhat parallel but smoother upward trajectory compared to sales. Beginning at 2,264 million USD in the first quarter of 2020, receivables increased consistently, peaking at 8,153 million USD in the second quarter of 2022. A decline in receivables followed through the end of 2023, reaching a low near the mid-4,500 million USD range. Notably, receivables rose again at the start of 2024, reaching near 6,695 million USD by September 30, 2024. This suggests fluctuations in the company's credit sales or collection efficiency impacting outstanding customer balances.

Receivables Turnover Ratio

The receivables turnover ratio, which indicates how efficiently the company collects its receivables, displayed a generally increasing trend from 2020 through 2023, signifying improving collection or credit policies. Starting from data availability in December 2020 at around 6.82, the ratio increased sharply, reaching a peak of approximately 14.73 by September 2023. This peak implies a faster conversion of receivables into cash during that period. However, turnover decreased gradually in the subsequent quarters, stabilizing in the range of 8.18 to 8.97 towards early 2025, which may indicate a relaxation of collection policies or lengthening of credit terms.

Overall, the revenue growth post-2020 downturn reflects a recovery from previous market disruptions. The accounts receivable and turnover ratio dynamics suggest periods of tightening and easing in credit management. The fluctuations in turnover rates paired with changes in receivable balances highlight a responsiveness to market conditions and internal credit control adjustments over the observed time frame.

Sales and other operating revenues

The sales and operating revenues exhibit a notable volatility from March 2020 through the end of 2025. Initially, there is a significant drop from 6,158 million USD in March 2020 to 2,749 million USD in June 2020, likely reflecting adverse external conditions. Subsequently, revenues recover progressively throughout the rest of 2020 and into 2021, peaking at 15,120 million USD in December 2021. This upward trend continues with fluctuations, reaching a high of 21,161 million USD in June 2022.
After mid-2022, revenues display some decline and variability, falling to 12,351 million USD by June 2023, before experiencing moderate increases and further oscillations through to March 2025. By the latest reported period, revenues rise again to 16,517 million USD. The pattern suggests cyclical influences and possible market or operational changes affecting sales volume or pricing over time.

Accounts payable

Accounts payable show an overall increasing trend from March 2020 to March 2025, rising from 2,921 million USD to 7,349 million USD. Although there are periods of minor reductions, the general trajectory is upward, with the most notable increases occurring between March 2021 and December 2022, where payables advance from 3,801 million USD to 6,163 million USD.
The sustained increase in accounts payable could indicate growing purchasing activities or extended payment terms with suppliers. The growth in payables in conjunction with fluctuating revenues highlights potential changes in working capital management strategies.

Payables turnover ratio

The payables turnover ratio, representing how often accounts payable are paid within a period, shows an increasing trend from March 2020 to March 2023, moving from approximately 6.96 to 14.81 times. This increase indicates a faster rate of payment to suppliers over time during this interval.
After reaching its peak in early 2023, the turnover ratio begins to decline, falling to 7.81 by March 2025. The reduction suggests that the company is taking longer to settle its payables or that purchasing volumes are changing relative to payments.
The inverse relationship between the rising accounts payable balance and decreasing payables turnover ratio in later periods suggests a shift toward more extended payment terms or slower payment cycles despite higher outstanding payables.

The working capital exhibits fluctuations over the observed periods. It initially declines from approximately 7,069 million USD in the first quarter of 2020 to a lower value near 6,419 million USD by the third quarter of 2020, before a modest recovery to 9,732 million USD by the third quarter of 2021. Subsequently, it decreases sharply to 4,029 million USD in the fourth quarter of 2021. Following this decline, the working capital demonstrates a series of moderate oscillations, ultimately arriving at approximately 3,577 million USD by the first quarter of 2025.

Sales and other operating revenues reflect a generally upward trajectory across the timeframe, notwithstanding some periodic dips. Initial revenues are recorded at 6,158 million USD in the first quarter of 2020, with a trough during the second quarter of 2020 at 2,749 million USD. Recovery and growth ensue, with revenues reaching a peak of 21,161 million USD in the second quarter of 2022. After this peak, a downward adjustment occurs, sliding to 12,351 million USD by the second quarter of 2023. Towards the end of the timeline, revenues display signs of stabilization and growth, reaching 16,517 million USD by the first quarter of 2025.

The working capital turnover ratio, which measures sales efficiency relative to working capital, presents a trend characterized by gradual increase and notable spikes. Data for this ratio begins in the second quarter of 2020 at 2.8, recording a steady rise to 3.72 by the fourth quarter of 2020. A significant surge is observed in the first quarter of 2021, rising to 11.37, with values maintaining high levels through 2022 and 2023, peaking near 17 in some quarters. This indicates increasing sales relative to working capital during this period. Towards the end of the period, the ratio demonstrates volatility but remains elevated, concluding at approximately 16.05 by the first quarter of 2025.

In summary, the entity experienced volatility in working capital levels, combined with a general increase in sales and other revenues over the reported period. The marked rise in working capital turnover suggests enhanced efficiency in utilizing working capital to generate sales, especially from 2021 onwards. Despite fluctuations in working capital, the continued growth in sales revenue implies operational improvements or changes in capital management practices supporting revenue generation. The stabilization of sales and maintenance of high turnover ratios near the final quarters suggest effectiveness in capital deployment relative to sales activities.

Inventory turnover

The inventory turnover ratio exhibited a steady upward trend from March 2021 through March 2023, rising from 18.75 to a peak of 64.39. This indicates an increasingly efficient management of inventory over this period, as the company turned over its inventory more frequently within the year. However, post-March 2023, the ratio saw a gradual decline, falling to 31.14 by March 2025. Despite this decrease, the turnover level remained higher compared to the initial observation in early 2021, suggesting a sustained, though diminished, level of inventory efficiency in the latter periods.

Average inventory processing period

Conversely, the average inventory processing period, measured in days, demonstrated a generally declining pattern from March 2021 to December 2022, dropping from 19 days to 6 days. This reduction aligns inversely with the inventory turnover trend, confirming an accelerated cycle for converting inventory into sales or usage. From December 2022 onwards, the processing period gradually increased to 12 days by March 2025. This upward shift indicates a lengthening in the time inventory remains in stock, corresponding with the decreasing inventory turnover in the same timeframe.

Overall observation

The data reveals a cycle of improved inventory efficiency followed by a moderate reversal. Initially, the company enhanced its inventory management, reducing holding periods and accelerating turnover significantly. Post 2023, the trend reversed gradually, with a slower inventory turnover and a prolonged inventory processing period, possibly reflecting changes in operational conditions, demand, or supply chain factors. Nonetheless, the earlier gains in inventory efficiency suggest a capacity for effective inventory control when conditions permit.

Receivables Turnover Ratio

The receivables turnover ratio exhibited an overall upward trend starting from the earliest available data point in March 2021. Initially measured at 6.82, the ratio showed fluctuations but increased significantly, reaching a peak of 14.73 in March 2023. Following this peak, the ratio experienced a decline but remained relatively stable in the range of about 8.18 to 11.47 through to the latest data in March 2025. This trend indicates an improvement in the efficiency of receivables collection over the period, with more rapid turnover of accounts receivable particularly notable until early 2023. Subsequently, the turnover ratio stabilized at a moderately high level, suggesting consistent management of receivables.

Average Receivable Collection Period

The average receivable collection period inversely mirrored the receivables turnover ratio trends. From a higher duration of 54 days in March 2021, the collection period generally shortened, reaching as low as 25 days by March 2023. This reduction in collection period corresponds with the increase in turnover ratio, reflecting more efficient receivables conversion into cash. After March 2023, the collection period slightly increased and fluctuated between 32 and 45 days through March 2025, indicating some moderation in collection speed but still maintaining a shorter period compared to the earlier phase. The fluctuations suggest adaptive collection strategies or varying credit terms impacting the receivable turnover efficiency after its peak performance.

Overall Analysis

The data indicate strong improvements in receivables management efficiency from early 2021 through early 2023, highlighted by a marked increase in receivables turnover and a corresponding decrease in collection days. This phase of enhanced performance may reflect improved credit control, customer payment behavior, or operational effectiveness. Following the peak, the subsequent moderation in both metrics points to stabilization of collection efficiency at a sustainable level, balancing aggressive receivables turnover with practical collection times. Attention to the slight increases in collection days post-2023 may be warranted to ensure ongoing efficiency in working capital management.

Average Inventory Processing Period

The average inventory processing period shows a generally declining trend from March 2021 through December 2023, dropping steadily from 19 days to a low of 6 days. This indicates improved efficiency in inventory management and faster turnover. However, from early 2024 onward, there is a reversal of this trend, with the period gradually increasing from 7 days in March 2024 to 12 days by the end of March 2025, suggesting a slowdown in inventory processing efficiency during this latest phase.

Average Receivable Collection Period

This metric exhibits considerable volatility over the observed time frame. Initially increasing sharply to 73 days by June 2020, it then decreases steadily to a low of 25 days by March 2023, signaling enhanced effectiveness in receivables collection. Yet, starting in mid-2023, the trend reverses, rising to 36 days by December 2023 and fluctuating in 2024, reaching 45 days in September 2024 before slightly declining to 41 days in March 2025. The fluctuations indicate challenges in maintaining consistent collection efficiency in the most recent periods.

Operating Cycle

The operating cycle follows a trajectory similar to the inventory and receivable periods. From March 2021 through March 2023, the operating cycle shortens significantly, decreasing from 73 days to 32 days, reflecting improved overall operational efficiency. However, starting in mid-2023, the cycle lengthens again, reaching 46 days by December 2023, and continues to show variability with a peak of 57 days in September 2024 before contracting to 53 days in March 2025. This pattern indicates an initial enhancement followed by some deterioration in the combined effectiveness of inventory management and receivable collections.

The payables turnover ratio exhibits a generally upward trend from the first available data point in March 2021 through March 2023, increasing from 6.96 to a peak of 14.81. This indicates an improving efficiency in paying off suppliers over this period. Following the peak, the ratio declines steadily through to March 2025, reaching 7.81, suggesting a slowdown in the rate at which payables are settled.

Correspondingly, the average payables payment period, measured in days, shows an inverse movement relative to the payables turnover ratio. The payment period decreases from 52 days in March 2021 down to a low of 25 days by March 2023, reflecting quicker payments to suppliers. After this point, the payment period increases consistently, reaching 47 days by March 2025, denoting a lengthening time to settle payables.

Payables Turnover

Ranged from 6.96 to a high of 14.81 between March 2021 and March 2023, then declined gradually to 7.81 by March 2025.

Average Payables Payment Period

Decreased from 52 days in March 2021 to 25 days by March 2023, then extended to 47 days by March 2025.

Insights

The inverse relationship between these two metrics aligns with typical financial behavior: as payables turnover increases, the payment period diminishes, indicating faster payments and stronger liquidity management. The reversal in these trends after early 2023 suggests a shift toward more extended credit terms or delayed payments.

Average Inventory Processing Period

The average inventory processing period exhibits a clear downward trend starting from March 2021, decreasing from 19 days to a low of 6 days in December 2022 and March 2023. This shorter processing period suggests enhanced efficiency in managing inventory. Subsequently, the period marginally increases to 8-10 days throughout 2023 and early 2024, with a slight rise to 12 days in the final two quarters of 2024 and the first quarter of 2025, indicating a moderate slowdown in inventory turnover.

Average Receivable Collection Period

The receivable collection period shows significant variability over the observed timeframe. From March 2021 to December 2021, values fluctuate between 55 and 73 days, suggesting some inconsistency in collections. From early 2022, collection periods improve, dropping progressively to 25 days by March 2023. However, after March 2023, the period generally stabilizes between 32 and 36 days, with occasional spikes to 45 days in March 2025. This indicates both improvements in receivables management and some volatility toward the end of the series.

Average Payables Payment Period

The payable payment period starts high at 52-62 days in mid-2021 and then declines steadily to 25 days by March 2023. This reduction suggests quicker payments to suppliers during this interval. Following this reduction, the payment period rises again, fluctuating between 31 and 40 days through 2023 and into 2024. In the final quarters, including March 2025, there is an increased payment period up to 47 days, which could indicate a strategic delay in payments or changes in supplier agreements.

Cash Conversion Cycle

The cash conversion cycle exhibits fluctuations correlating with changes in the inventory processing, receivables, and payables periods. Initially, it rises from 21 days in March 2021 to a peak of 29 days in June 2021, before improving significantly to a low of 6-7 days during late 2022 and early 2023. Post this period, the cycle hovers between 7 and 12 days, showing some degree of stability. Nonetheless, there is noticeable variability towards the end of the dataset, with a notable peak of 17 days in March 2025 before dropping back to 6 days. This indicates periodic shifts in working capital efficiency.