Marathon Petroleum Corp. (NYSE:MPC)

The financial data reveals several noteworthy trends concerning inventory components and overall inventory valuation over the five-year span from 2019 to 2023.

Crude Oil

The value of crude oil inventories experienced a decline from 2019 to 2020, dropping from 3,472 million US dollars to 2,588 million US dollars. This was followed by a modest recovery through 2021 and continuing growth in 2022 and 2023, with the value reaching 3,211 million US dollars. This suggests a period of volatility likely influenced by changing market conditions, with recent years indicating a strengthening in crude oil stock valuation.

Refined Products

Refined products inventories showed a similar downward movement in 2020, decreasing from 5,548 million US dollars to 4,478 million US dollars. The subsequent years saw a slight decline continuing through 2021, stabilizing somewhat in 2022, and then increasing again in 2023 to 4,940 million US dollars. The pattern indicates initial contraction likely tied to external factors in 2020, with gradual recovery thereafter.

Materials and Supplies

This category displayed relatively stable values from 2019 through 2021, with a slight dip in 2020 but subsequent growth in 2022 and 2023, increasing from 933 million US dollars to 1,166 million US dollars. This steady increase in recent years may reflect enhanced operational inputs or strategic stockpiling of materials.

Merchandise

Merchandise was recorded only in 2019, valued at 227 million US dollars. There is an absence of subsequent data, which could indicate a change in inventory classification or reporting practices, or possibly the elimination of this inventory category.

Inventories (Total)

The aggregate inventory value shows a clear decline from 10,243 million US dollars in 2019 to 7,999 million US dollars in 2020, coinciding with the drops in crude oil and refined products components. After 2020, total inventories exhibited a gradual upward trend, reaching 9,317 million US dollars in 2023. This partial recovery suggests adaptation to market conditions and operational adjustments to rebuild inventory levels.

Overall, the data indicates an initial impact in 2020 likely related to external market disruptions, followed by a measured recovery in inventory holdings. The trends in individual inventory categories contribute to a broader understanding of inventory management strategies over this period.

Inventories

Reported inventories experienced a decline from 10,243 million USD in 2019 to 7,999 million USD in 2020. Subsequently, there was a gradual increase through 2021 to 2023, reaching 9,317 million USD. Adjusted inventories, which account for LIFO reserve adjustments, showed a more volatile trend with an initial drop in 2020 to 7,999 million USD but a significant rebound in 2021 to 10,895 million USD, peaking at 12,547 million USD in 2022 before slightly decreasing to 12,087 million USD in 2023.

Current Assets

Reported current assets demonstrated steady growth from 20,170 million USD in 2019 to a peak of 35,242 million USD in 2022, followed by a decrease to 32,131 million USD in 2023. Adjusted current assets, reflecting the inventory adjustments, also increased consistently but at higher levels, rising from 21,041 million USD in 2019 to 38,962 million USD in 2022, then declining to 34,901 million USD in 2023.

Total Assets

Total reported assets dropped notably from 98,556 million USD in 2019 to 85,158 million USD in 2020, then remained relatively stable with slight increases and decreases up to 85,987 million USD by 2023. Adjusted total assets, which include the inventory adjustments, followed a similar downward trajectory initially but showed somewhat greater fluctuations, ending at 88,757 million USD in 2023, higher than reported figures for that year.

Stockholders’ Equity

The reported total stockholders' equity decreased sharply from 33,694 million USD in 2019 to 22,199 million USD in 2020, before gradually recovering to 27,715 million USD in 2022 and declining again to 24,404 million USD in 2023. Adjusted equity figures, accounting for inventory adjustments, displayed a parallel trend with a low of 22,199 million USD in 2020, followed by recovery to 31,435 million USD in 2022 and a decrease to 27,174 million USD in 2023. Overall, equity showed sensitivity to inventory valuation adjustments, particularly noticeable in the recovery phase.

Net Income

Reported net income exhibited significant volatility, marked by a substantial loss of -9,826 million USD in 2020 following a positive 2,637 million USD in 2019. Profitability bounced back strongly in 2021 to 9,738 million USD, peaked at 14,516 million USD in 2022, and receded to 9,681 million USD in 2023. Adjusted net income figures demonstrated more pronounced fluctuations, with losses in 2020 of -10,613 million USD, followed by higher positive income figures in 2021 (12,578 million USD) and 2022 (15,396 million USD), ending with 8,731 million USD in 2023. The adjustment for inventory valuation positively impacted net income in positive years and exacerbated losses in the loss year, indicating the material effect of LIFO reserve adjustments on reported earnings.

The analysis of the financial data over the period from 2019 to 2023 reveals several notable trends and insights into the company's performance.

Liquidity Ratios

The reported current ratio demonstrates an improvement from 1.25 in 2019 to a peak of 1.81 in 2020, followed by slight fluctuations and a slight decline to 1.59 by 2023. When adjusted for inventory LIFO reserve, however, the current ratio shows a consistent upward trend peaking at 1.95 in 2022 before decreasing slightly to 1.73 in 2023. This suggests that the adjustment provides a more favorable view of the company's short-term liquidity, although liquidity remains relatively stable.

Profitability Margins

Reported net profit margins display significant volatility, with a positive 2.13% in 2019, a sharp loss of -14.08% in 2020, and a recovery to moderate positive margins thereafter, ending at 6.52% in 2023. The adjusted net profit margin mirrors this pattern but generally reports higher margins in positive years and deeper losses in 2020, indicating that LIFO reserve adjustments affect cost of goods sold and profit reporting notably. The peak adjusted margin of 10.48% in 2021 suggests an improved underlying profitability not fully captured in reported figures.

Efficiency Ratios

Total asset turnover ratios indicate operational efficiency in using assets to generate sales. Both reported and adjusted turnovers dip sharply from around 1.25 in 2019 to 0.82 in 2020, likely reflecting reduced asset utilization during periods of distress. Thereafter, these ratios increase robustly, reaching reported levels of 1.97 in 2022 before a slight dip to 1.73 in 2023. The adjusted turnovers remain slightly lower than reported values but show a similar trend, indicating recovery and improved asset use efficiency post-2020.

Financial Leverage

Financial leverage ratios rise significantly from near 2.9 in 2019 to a peak of 3.84 in 2020, signaling increased reliance on debt or other financing sources during that period. Subsequently, leverage declines steadily to around 3.24-3.52 in the reported data and slightly lower levels in adjusted figures by 2023. The leverage trend suggests a response to financial stress in 2020, with gradual deleveraging or stabilization thereafter, especially after adjusting for inventory effects.

Return Measures – ROE and ROA

Reported Return on Equity (ROE) exhibits dramatic fluctuations, plunging to -44.26% in 2020 from 7.83% in 2019, then recovering strongly to 52.38% in 2022 before moderating to 39.67% in 2023. The adjusted ROE follows the same pattern but reports even more extreme negative figures in 2020 (-47.81%) and generally higher positive returns in other years. This volatility highlights the impact of operating conditions and inventory valuation adjustments on shareholder returns.

Return on Assets (ROA) similarly shows a deep negative in 2020 (-11.54% reported, -12.46% adjusted) sandwiched between positive returns in adjacent years. The peak in 2022 (16.15% reported and 16.44% adjusted) suggests efficient use of assets during recovery. However, the decline to 11.26% (reported) and 9.84% (adjusted) in 2023 indicates some reduction in asset profitability.

In summary, the financial data reveals a company that experienced significant operational and financial stress in 2020, affecting its profitability, liquidity, efficiency, and leverage. Following that year, there is a clear pattern of recovery and improved performance across key ratios, although some fluctuations and moderation in gains are evident by 2023. The adjustments for inventory LIFO reserve generally provide a more conservative but clearer view of liquidity and profitability, demonstrating the importance of considering inventory valuation in financial analysis.

The analysis of the reported and inventory LIFO reserve adjusted financial data reveals several notable trends in the current assets and current ratio over the five-year period ending December 31, 2023.

Current Assets

Reported current assets display a consistent upward trajectory from 2019 through 2022, increasing from 20,170 million US dollars in 2019 to 35,242 million US dollars in 2022. However, in 2023, there is a decline to 32,131 million US dollars. The adjusted current assets, which account for the inventory LIFO reserve, show a similar pattern but start at a higher base of 21,041 million US dollars in 2019. Adjusted figures steadily rise to a peak of 38,962 million US dollars in 2022 before falling to 34,901 million US dollars in 2023. This indicates the impact of inventory valuation adjustments on reported asset values, with the adjusted figures consistently exceeding reported figures each year.

Current Ratio

The reported current ratio demonstrates improvement from 1.25 in 2019 to 1.81 in 2020, followed by a slight decline to 1.7 in 2021. It then increases again to 1.76 in 2022 before decreasing to 1.59 in 2023. The adjusted current ratio follows a similar but distinctly more positive trend. Starting at 1.3 in 2019, it rises to 1.81 in 2020 and further improves to 1.86 in 2021, reaching the highest value of 1.95 in 2022. The 2023 figure shows a decline to 1.73, yet this remains above the reported ratio. This pattern suggests that inventory adjustments provide a more favorable liquidity position throughout the period, highlighting a consistently higher ability to cover current liabilities with adjusted current assets.

Overall, the data portrays a period of growth in assets and liquidity from 2019 to 2022, followed by a contraction in 2023. The adjusted measures, which account for inventory valuation techniques, typically present a stronger liquidity profile than the reported values, underscoring the significant effect inventory accounting practices have on assessing the company's short-term financial health.

The financial data reveals significant fluctuations in both reported and inventory LIFO reserve adjusted net income attributable to the company over the five-year period.

Net Income Trends

Reported net income showed a substantial decline in 2020, swinging from a positive $2,637 million in 2019 to a loss of $9,826 million. This was followed by a strong recovery in 2021 and 2022, with reported net income increasing to $9,738 million and $14,516 million, respectively, before decreasing somewhat to $9,681 million in 2023.

Adjusted net income, which accounts for inventory LIFO reserve adjustments, followed a similar pattern. It declined more sharply in 2020 to a loss of $10,613 million from $3,508 million in 2019. Subsequently, there was a recovery to $12,578 million in 2021 and $15,396 million in 2022, but a notable decline to $8,731 million was observed in 2023.

Net Profit Margin Trends

The reported net profit margin mirrored the income trends, decreasing from a positive 2.13% in 2019 to negative 14.08% in 2020. It then rebounded to 8.12% in 2021 and remained relatively steady at 8.18% in 2022 before decreasing to 6.52% in 2023.

Adjusted net profit margin showed a similar trajectory, declining from 2.83% in 2019 to negative 15.21% in 2020. It then increased to 10.48% in 2021 and decreased thereafter to 8.68% in 2022 and further to 5.88% in 2023.

Comparative Observations

Throughout the period, adjusted figures for net income and profit margins tend to be slightly more volatile and show more extreme negative and positive values compared to reported figures. The deeper losses in 2020 and higher gains in 2021 and 2022 suggest that adjustments related to inventory LIFO reserves have a magnifying effect on reported earnings metrics during periods of market stress and recovery.

Insights

The data indicates a material impact of external factors in 2020, which negatively affected profitability, followed by a recovery phase over the next two years. The decline in profitability observed in 2023 could signal emerging challenges or market changes. Adjustments for LIFO reserve appear to accentuate the swings in profitability, highlighting the importance of inventory accounting considerations in analyzing financial performance.

Over the analyzed period, total assets exhibited variability with a general decline from 2019 through 2020, followed by a gradual increase until 2022, and a subsequent decrease in 2023. The reported total assets decreased from approximately 98.6 billion US dollars in 2019 to 85.2 billion US dollars in 2020, suggesting a significant reduction in asset base during that year. Thereafter, total assets marginally increased to around 85.4 billion in 2021 and continued rising to nearly 89.9 billion in 2022, before declining again to about 86.0 billion in 2023.

When adjusted for the inventory LIFO reserve, total assets show a slightly different progression. Adjusted total assets were highest in 2019 at approximately 99.4 billion US dollars, closely mirroring reported assets but reflecting the impact of the inventory adjustment. Adjusted figures exhibit a sharper increase in 2021 and 2022, reaching about 88.2 billion and 93.6 billion, respectively, before declining to 88.8 billion in 2023. This implies the inventory LIFO reserve adjustment has a notable effect on asset valuation, especially in the later years, resulting in higher asset values than the reported amounts during the upward trend period.

Total asset turnover ratios reveal operational performance trends in relation to asset efficiency. The reported total asset turnover declined markedly from 1.26 in 2019 to 0.82 in 2020, indicating a reduction in sales generated per unit of assets amid that period. This ratio recovered substantially in 2021 and 2022, reaching 1.41 and 1.97 respectively, demonstrating improved asset utilization and sales efficiency. In 2023, there was a decline to 1.73, still above initial values but below the peak observed in 2022.

The adjusted total asset turnover ratios follow a similar trend, starting at 1.25 in 2019, dipping to 0.82 in 2020, then increasing to 1.36 in 2021 and 1.90 in 2022, with a decrease to 1.67 in 2023. The adjusted ratios are slightly lower than the reported ratios in most years, suggesting that the inventory LIFO reserve adjustment moderately influences the performance metrics, making asset turnover appear less efficient when adjustments are considered.

Overall, the data indicate a significant disruption in asset base and asset utilization in 2020, likely linked to external challenges. Recovery in asset utilization is strong over the next two years, with 2022 demonstrating the highest operational efficiency within the analyzed period. The downward shift in both asset base and turnover in 2023 suggests potential emerging challenges or changes in business conditions. The inventory LIFO reserve adjustment affects asset valuation and related efficiency metrics, emphasizing the importance of considering these adjustments for a comprehensive financial analysis.

The analysis of the reported and inventory LIFO reserve adjusted financial data reveals several notable trends in assets, equity, and financial leverage over the five-year period.

Total Assets

The reported total assets decreased significantly from $98,556 million in 2019 to $85,158 million in 2020, reflecting a sharp contraction likely due to external factors impacting asset values or operational scale. From 2020 onwards, reported assets displayed a gradual recovery with values rising to $85,373 million in 2021 and further increasing to $89,904 million in 2022, before declining again to $85,987 million in 2023.

Adjusted total assets, which account for inventory LIFO reserve adjustments, started higher than reported assets at $99,427 million in 2019 but experienced the same sharp drop to $85,158 million in 2020. Unlike reported assets, adjusted assets continued a steady upward trend through 2021 ($88,213 million) and 2022 ($93,624 million), before slightly falling to $88,757 million in 2023. This suggests that the LIFO adjustment provides a more pronounced recovery in asset values post-2020.

Stockholders’ Equity

Reported stockholders’ equity showed a sharp decrease from $33,694 million in 2019 to $22,199 million in 2020, indicating a significant erosion of equity or possibly dividend payments or losses during that year. It partially recovered in subsequent years, reaching $26,206 million in 2021 and $27,715 million in 2022, before declining again to $24,404 million in 2023.

The adjusted equity, incorporating LIFO reserve adjustments, followed a similar pattern but consistently showed higher values than the reported equity except in 2020 where they matched. It started at $34,565 million in 2019, dropped to $22,199 million in 2020, then climbed more robustly to $29,046 million in 2021 and $31,435 million in 2022, before tapering to $27,174 million in 2023. This reinforces the indication of stronger equity resilience when considering the inventory accounting adjustments.

Financial Leverage

Reported financial leverage, defined as the ratio of total assets to equity, exhibited notable volatility. The ratio increased from 2.93 in 2019 to a peak of 3.84 in 2020, reflecting increased reliance on debt or reduction in equity base. It then attenuated to 3.26 in 2021 and stabilized near 3.24 in 2022 before rising again to 3.52 in 2023, indicating a tendency towards higher leverage in the latest year.

Adjusted financial leverage, which accounts for LIFO reserve effects, showed a slightly lower and more stable profile. The ratio started at 2.88 in 2019, rose sharply to 3.84 in 2020 mirroring the reported leverage, but subsequently declined to 3.04 in 2021 and 2.98 in 2022. Although it increased again to 3.27 in 2023, it remained below the corresponding reported leverage value, suggesting that inventory adjustments temper the leverage effect somewhat.

In summary, the data indicates the company experienced considerable financial stress around 2020, with substantial declines in assets and equity and increased financial leverage. Adjustments for inventory valuation through the LIFO reserve reveal a more favorable financial position in subsequent years, including higher asset and equity levels and somewhat moderated leverage ratios. The trends also imply that while some recovery was evident between 2021 and 2022, 2023 reflected renewed challenges with decreases in adjusted equity and assets and rising leverage. This highlights the importance of considering the LIFO reserve adjustments to obtain a more nuanced understanding of the company’s financial condition over time.

The data reveals significant volatility in net income and equity figures over the analyzed period. Considerable fluctuations are observed in both reported and adjusted net income, with a sharp decline to negative values in 2020 followed by a rebound in subsequent years.

Net Income Trends

Reported net income attributable to MPC shows a pronounced negative value in 2020 (-9,826 million USD), reflecting a substantial loss compared to 2,637 million USD profit in 2019. This is followed by a recovery in 2021 with a profit of 9,738 million USD, which further increases to 14,516 million USD in 2022 before declining to 9,681 million USD in 2023. Adjusted net income follows a similar pattern but generally reports higher values, indicating the inclusion of LIFO reserve adjustments and other corrections. The adjusted figures show a more pronounced recovery post-2020, peaking at 15,396 million USD in 2022 before decreasing to 8,731 million USD in 2023.

Stockholders’ Equity

Reported total stockholders’ equity exhibits a downward trend initially, dropping from 33,694 million USD in 2019 to 22,199 million USD in 2020. Thereafter, it recovers modestly to 26,206 million USD in 2021 and continues to rise to 27,715 million USD in 2022 before declining again to 24,404 million USD in 2023. Adjusted equity values, which account for inventory LIFO reserve adjustments, start slightly higher than reported equity in 2019, align with reported values in 2020, then show a more consistent upward trend through 2022, reaching 31,435 million USD before decreasing to 27,174 million USD in 2023. This suggests that LIFO adjustments have a meaningful impact on perceived equity, potentially smoothing out some volatility observed in reported values.

Return on Equity (ROE)

Reported ROE follows the income and equity trends, with a positive 7.83% in 2019 plunging to a negative -44.26% in 2020, reflecting the severe loss that year. The return rebounds substantially to 37.16% in 2021 and peaks at 52.38% in 2022, before tapering to 39.67% in 2023. Adjusted ROE figures present a similar trajectory but with somewhat more extreme swings, including a deeper negative in 2020 (-47.81%) and a slightly muted rise post-2020, peaking at 48.98% in 2022 and declining more sharply to 32.13% in 2023. This pattern indicates that adjustments tend to magnify the impact of underlying income fluctuations on equity returns.

Overall, the data illustrates a period of considerable financial turmoil in 2020, followed by strong recovery phases in both income and equity metrics. Adjustments for inventory LIFO reserves provide a more nuanced picture, often showing higher earnings and equity levels compared to reported figures, and influencing the calculation of return on equity. The downward trend in 2023 across most adjusted and reported metrics may suggest emerging challenges or a normalization after the previous recovery peak.

The financial data for Marathon Petroleum Corp. demonstrates notable volatility in profitability measures over the reported periods, with significant fluctuations observed in both reported and adjusted net income figures. In 2019, the company recorded a positive net income, followed by a substantial loss in 2020, with a recovery phase beginning in 2021 and continuing through 2023, although the net income in 2023 did not reach the peak levels of 2021 and 2022.

Adjusted net income, which accounts for LIFO reserve adjustments, mirrors the overall trend seen in reported net income but tends to show larger absolute values both in gains and losses. This suggests that inventory accounting adjustments have a pronounced impact on the perceived profitability of the company. The adjusted net income loss in 2020 is deeper than the reported figure, and both measures experience a strong rebound in subsequent years, peaking in 2022, and then falling again in 2023.

Regarding asset base, reported total assets show a decline from 2019 to 2020, a marginal increase in 2021 and 2022, followed by a slight decrease in 2023. Adjusted total assets, incorporating inventory LIFO reserve adjustments, display a similar general pattern with slightly higher asset values during 2021 through 2023, indicating an upward adjustment to asset valuation when accounting for inventory methods.

Return on assets (ROA), both reported and adjusted, aligns conceptually with the income patterns. It is positive in 2019, deeply negative in 2020, then improves markedly in 2021 and 2022 before declining in 2023. The adjusted ROA generally exceeds the reported ROA in magnitude during positive performance years, reflecting higher asset valuation and profitability after inventory adjustment, but also shows a worse negative return in 2020 relative to the reported ROA, consistent with the adjusted net income behavior.

Profitability Trends

Strong cycle reflected in net income with a major disruption in 2020, followed by recovery and partial decline in 2023.

Adjusted net income amplifies these fluctuations, illustrating the impact of inventory valuation on profitability.

Asset Base Trends

Reported assets decreased sharply in 2020, then stabilized with slight growth and decline, while adjusted assets indicate a slightly larger base from 2021 onward due to inventory adjustments.

Return on Assets

ROA experiences wide swings, from positive to negative and back to positive, but drops again in the latest year.

Adjusted ROA highlights stronger returns during profitable periods and more severe losses during downturns, reflecting inventory accounting effects.

Overall, the data shows that inventory LIFO reserve adjustments significantly affect both profit and asset figures, leading to more pronounced fluctuations in profitability metrics. The substantial loss in 2020 appears to be an outlier within an otherwise cyclical but recovering performance pattern through 2023.