Marathon Petroleum Corp. (NYSE:MPC)

Inventory Turnover

The inventory turnover ratio experienced a decrease from 10.76 in 2019 to 8.22 in 2020, indicating slower inventory movement during that year. This was followed by a significant increase to 13.66 in 2021 and a further rise to 17.18 in 2022, suggesting improved efficiency in inventory management. However, in 2023, the ratio decreased to 13.8, marking a slight decline from the prior year but remaining above pre-2021 levels.

Receivables Turnover

The receivables turnover ratio showed a downward trend from 15.75 in 2019 to 12.11 in 2020 and further to 10.87 in 2021, indicating slower collection of receivables. It rebounded somewhat to 13.17 in 2022 but slightly declined again to 12.77 in 2023. Overall, receivables turnover exhibited volatility and remained below the 2019 level during the latter years.

Payables Turnover

Payables turnover declined gradually from 9.48 in 2019 to 8.42 in 2020 and then to 8.03 in 2021, implying that the company was taking longer to pay its suppliers. The ratio improved to 9.91 in 2022 and slightly decreased to 9.34 in 2023, suggesting a partial recovery in payment speed but still near the level of 2019.

Working Capital Turnover

The working capital turnover ratio dropped sharply from 30.81 in 2019 to 5.53 in 2020, reflecting a significant decrease in the efficiency of utilizing working capital. It gradually improved in the following years to 9.52 in 2021, 11.66 in 2022, and 12.38 in 2023, but remained well below the 2019 peak, indicating ongoing challenges in capital utilization.

Average Inventory Processing Period

The average inventory processing period increased from 34 days in 2019 to 44 days in 2020, indicating slower inventory turnover during that year. It then decreased substantially to 27 days in 2021 and further to 21 days in 2022, signifying more efficient inventory management. In 2023, the period lengthened slightly to 26 days but stayed below the levels of 2019 and 2020.

Average Receivable Collection Period

The average days to collect receivables increased from 23 days in 2019 to 30 days in 2020 and further to 34 days in 2021, indicating slower cash inflows from customers. This trend reversed somewhat with a decrease to 28 days in 2022, followed by a modest increase to 29 days in 2023, suggesting some fluctuation but an overall elongation compared to 2019.

Operating Cycle

The operating cycle, which combines inventory and receivables periods, extended from 57 days in 2019 to 74 days in 2020, highlighting slower asset conversion to cash. It improved to 61 days in 2021 and further to 49 days in 2022, before lengthening again to 55 days in 2023. Though better than in 2020, the cycle remained longer than the pre-2020 period.

Average Payables Payment Period

The average number of days taken to pay suppliers increased from 38 days in 2019 to 43 days in 2020 and 45 days in 2021, indicating a lengthening payment cycle. It shortened to 37 days in 2022, representing faster payments, but increased again to 39 days in 2023, with levels near those seen in 2019.

Cash Conversion Cycle

The cash conversion cycle grew from 19 days in 2019 to 31 days in 2020, reflecting a less efficient cash flow cycle. It then improved significantly to 16 days in 2021 and further to 12 days in 2022, suggesting enhanced cash management. In 2023, the cycle lengthened to 16 days, indicating a slight reduction in cash flow efficiency compared to the previous year but still better than the earliest years.

The financial data reveals several noteworthy trends and shifts over the five-year period.

Cost of Revenues

The cost of revenues exhibited substantial volatility from 2019 through 2023. It declined sharply from $110,243 million in 2019 to $65,733 million in 2020, likely reflecting a significant reduction in business activity or pricing pressures during that year. Subsequently, there was a strong recovery in 2021 with cost of revenues increasing back close to 2019 levels, reaching $110,008 million. The trend continued upward in 2022, peaking at $151,671 million, before experiencing a moderate decline to $128,566 million in 2023. The overall pattern indicates sensitivity to external factors, with a rebound from the 2020 low but some normalization in the most recent year.

Inventories

Inventories showed a generally stable and gradually increasing trend. Starting at $10,243 million in 2019, inventory values declined to $7,999 million in 2020, aligning with the drop in cost of revenues. However, inventories remained relatively flat in 2021 at $8,055 million before rising steadily in 2022 and 2023 to $8,827 million and $9,317 million, respectively. This trend suggests cautious inventory management aligned with operational activity, with an uptick in stockholding as revenues and costs recovered.

Inventory Turnover

Inventory turnover ratios fluctuated significantly during the period. The ratio decreased from 10.76 in 2019 to 8.22 in 2020, consistent with lower sales volumes or slower inventory movement during that year. The ratio then increased substantially in 2021 to 13.66 and peaked in 2022 at 17.18, indicating more efficient inventory management or higher sales relative to inventory. In 2023, the ratio declined somewhat to 13.8 but remained well above the 2019 and 2020 levels. The elevated turnover in 2021 and 2022 reflects improved operational effectiveness or stronger demand, while the slight decrease in 2023 may reflect inventory accumulation or slowing sales.

Overall, the data demonstrates a period of disruption in 2020, followed by recovery and adjustments in inventory management and cost structures through 2023. The company appears to have adapted to changing market conditions with improved inventory efficiency and fluctuating cost of revenue aligned with broader operational trends.

Sales and other operating revenues

The sales and other operating revenues experienced a significant decline in 2020, dropping from $123,949 million in 2019 to $69,779 million, reflecting a substantial reduction likely influenced by external factors impacting the business environment. In 2021, revenues rebounded considerably to $119,983 million, nearing pre-2020 levels. This upward trend continued into 2022, reaching a peak of $177,453 million, the highest within the observed period. However, in 2023, the revenues decreased to $148,379 million, indicating a contraction after the peak but still remaining above the 2019 baseline.

Receivables, less allowance for doubtful accounts

The receivables showed a downward trend initially, declining from $7,872 million in 2019 to $5,760 million in 2020. This decline coincides with the drop in revenues during the same period. Subsequently, the receivables increased sharply to $11,034 million in 2021 and continued to rise to $13,477 million in 2022. There was a slight decrease in 2023, with receivables amounting to $11,619 million. Overall, receivables appear to have expanded in correspondence with revenue growth post-2020.

Receivables turnover ratio

The receivables turnover ratio, which measures how efficiently receivables are collected, declined from 15.75 in 2019 to 12.11 in 2020, indicating slower collection during a period of revenue contraction. The downward trend persisted into 2021, reaching 10.87, the lowest ratio in the time series, suggesting further deceleration in turnover efficiency despite recovering revenues. In 2022, the ratio improved to 13.17, reflecting better collections efficiency alongside peak revenues, and slightly decreased to 12.77 in 2023. Overall, while there was some recovery post-2021, the ratio has not returned to the 2019 level.

The analysis of the financial data reveals several notable trends in the cost of revenues, accounts payable, and payables turnover ratio over the five-year period ending in 2023.

Cost of revenues

The cost of revenues experienced significant fluctuations during the period. It sharply decreased from $110,243 million in 2019 to $65,733 million in 2020, likely reflecting reduced operational activity. This was followed by a substantial recovery in 2021, rising close to the 2019 level at $110,008 million. The cost then increased markedly to $151,671 million in 2022, the highest point in the observed period, before declining to $128,566 million in 2023. Overall, this pattern indicates sensitivity to market conditions, with a pronounced rebound and peak in 2022 before moderating in 2023.

Accounts payable

Accounts payable followed a somewhat volatile but upward trend. Starting at $11,623 million in 2019, it decreased notably to $7,803 million in 2020. Subsequently, it rose to $13,700 million in 2021 and continued to increase to $15,312 million in 2022. In 2023, accounts payable slightly declined to $13,761 million. This trend suggests variability in trade payables management or supplier credit terms, with a peak in 2022 followed by a modest reduction.

Payables turnover ratio

The payables turnover ratio declined from 9.48 in 2019 to 8.42 in 2020 and then further to 8.03 in 2021, indicating a slower rate of payment to suppliers during this period. However, the ratio increased significantly to 9.91 in 2022, denoting quicker payments, and then slightly decreased to 9.34 in 2023. This suggests improved efficiency in managing payables in 2022, with a minor adjustment in 2023.

In summary, the data portrays a company that experienced a sharp drop and recovery in cost of revenues, with the highest operational costs in 2022. Accounts payable showed variability, peaking in 2022 before a slight downturn. The payables turnover ratio illustrates a trend towards slower payments up to 2021, followed by enhanced payment efficiency in 2022 and a minor decrease afterward. These trends could reflect responses to changing market dynamics and operational strategies over the period.

Working Capital

The working capital experienced a substantial increase from 2019 to 2020, rising from 4,023 million USD to 12,624 million USD. It remained relatively stable in 2021 at 12,598 million USD, followed by a further increase in 2022 to 15,222 million USD. However, in 2023, working capital declined to 11,981 million USD, indicating some fluctuations in short-term financial resources over the observed period.

Sales and Other Operating Revenues

Sales and other operating revenues showed a pronounced decrease from 123,949 million USD in 2019 to 69,779 million USD in 2020, reflecting a significant drop. This was followed by a recovery phase; revenues increased to 119,983 million USD in 2021 and surged further to 177,453 million USD in 2022. In 2023, revenues decreased again to 148,379 million USD, suggesting variability but overall growth compared to 2020-2021 levels.

Working Capital Turnover Ratio

The working capital turnover ratio declined sharply from 30.81 in 2019 to 5.53 in 2020, indicating reduced efficiency in using working capital to generate sales. Subsequently, the ratio improved steadily, reaching 9.52 in 2021, 11.66 in 2022, and 12.38 in 2023. Despite this recovery, the turnover remained considerably lower than the 2019 level, suggesting ongoing changes in operational efficiency or working capital management.

Inventory Turnover

The inventory turnover ratio exhibited fluctuation over the five-year period. It decreased from 10.76 in 2019 to 8.22 in 2020, indicating a slower movement of inventory during this interval. A substantial increase followed in 2021, reaching 13.66, and further improvement to 17.18 in 2022, suggesting a more efficient inventory management or higher sales velocity. However, the ratio moderated to 13.8 in 2023, slightly declining yet remaining higher than the initial years.

Average Inventory Processing Period

The average inventory processing period, expressed in days, moved inversely in relation to the turnover ratio as expected. It lengthened from 34 days in 2019 to 44 days in 2020, signifying slower inventory movement. Subsequently, a notable reduction occurred, declining to 27 days in 2021 and further to 21 days in 2022, consistent with the increase in turnover ratio. In 2023, the period increased slightly to 26 days, aligning with the slight decrease observed in turnover.

Overall Trends and Insights

The data reflects a period of reduced inventory efficiency in 2020, potentially linked to external factors affecting operations or demand. Recovery and improvement ensued over the following two years, with inventory moving more rapidly and efficiency peaking in 2022. The slight reversal in 2023 indicates a modest easing from peak efficiency but maintains a better performance relative to the earlier years. This pattern suggests adaptive inventory management and possibly fluctuating market conditions impacting inventory turnover and processing duration.

Receivables Turnover

The receivables turnover ratio exhibits a declining trend from 15.75 in 2019 to a low of 10.87 in 2021, indicating a reduction in the efficiency of collecting receivables during that period. Subsequently, there is a partial recovery with the ratio rising to 13.17 in 2022 and slightly decreasing to 12.77 in 2023. Despite this rebound, the 2023 turnover remains below the 2019 level, suggesting that the company's collection efficiency has not fully returned to the pre-2020 performance.

Average Receivable Collection Period

The average receivable collection period, expressed in days, moves inversely relative to the receivables turnover. Starting at 23 days in 2019, it increases steadily to 34 days by 2021, reflecting a lengthening in the time required to collect receivables. There is improvement afterward, with the collection period decreasing to 28 days in 2022, but it slightly increases again to 29 days in 2023. This pattern indicates some recovery in collection efficiency but not to the initial 2019 benchmark.

Overall Analysis

The data suggest that the company experienced a decline in receivables collection efficiency between 2019 and 2021, potentially due to external or operational factors impacting cash flow management. The subsequent years show signs of improvement, though the metrics have not reverted fully to the levels seen in 2019. This may indicate ongoing challenges in accounts receivable management or changing business conditions that affect the timing of cash inflows.

Average Inventory Processing Period

The average inventory processing period experienced fluctuation over the observed years. It increased from 34 days in 2019 to 44 days in 2020, indicating a slower turnover during that year. Subsequently, it decreased significantly to 27 days in 2021 and further declined to 21 days in 2022, reflecting improvements in inventory management or faster processing. In 2023, a slight increase to 26 days was noted, though the period remained lower than the levels observed before 2021.

Average Receivable Collection Period

The average receivable collection period showed a general upward trend from 2019 through 2021, rising from 23 days to 34 days. This suggests that receivables were being collected more slowly during this period. However, the period shortened to 28 days in 2022, indicating improvement in collections. In 2023, the period increased marginally to 29 days, signaling a stabilization but still higher than the initial years.

Operating Cycle

The operating cycle exhibited volatility across the timeframe. Starting at 57 days in 2019, it saw a considerable increase to 74 days in 2020, driven likely by the extension of both inventory processing and receivable periods during that year. It then shortened to 61 days in 2021 and continued a downward trend to 49 days in 2022, suggesting enhanced overall operational efficiency. In 2023, the operating cycle rose modestly to 55 days, indicating a slight deceleration but remaining below the highest point observed in 2020.

The payables turnover ratio exhibits variability over the examined period. Starting at 9.48 in 2019, it experienced a decline reaching 8.03 by the end of 2021. Subsequently, the ratio improved significantly, peaking at 9.91 in 2022 before slightly decreasing to 9.34 in 2023. This fluctuation indicates some inconsistency in how quickly payables are being turned over, though the trend suggests an overall recovery and improvement after the 2021 low point.

Examining the average payables payment period, a pattern inversely related to the payables turnover is observed. The number of days increased from 38 in 2019 to 45 by the end of 2021, implying a slower payment process during those years. However, there was a notable reduction to 37 days in 2022, followed by a slight increase to 39 days in 2023. This trend aligns with the payables turnover changes, reflecting a shorter payment period when the turnover ratio is higher and vice versa.

Overall, the data suggests that the company managed to reduce its payables payment period after 2021 and improve payables turnover, indicating efforts to enhance working capital efficiency in the most recent years. However, the fluctuations imply some variability in payment practices across the observed timeline.

Average Inventory Processing Period

The average inventory processing period shows a fluctuating but generally decreasing trend over the five-year period. It increased from 34 days in 2019 to a peak of 44 days in 2020, before declining sharply to 27 days in 2021 and further to 21 days in 2022. In 2023, there was a slight increase to 26 days, indicating a recent modest rise in the time taken to process inventory.

Average Receivable Collection Period

The average receivable collection period has experienced an overall upward trend. Starting at 23 days in 2019, it increased steadily to 30 days in 2020 and further to 34 days in 2021. Following this peak, it decreased to 28 days in 2022 but rose slightly again to 29 days in 2023. This suggests some variability, with a general expansion in the time required to collect receivables compared to the beginning of the period.

Average Payables Payment Period

The average payables payment period rose from 38 days in 2019 to a high of 45 days in 2021, indicating an extended period for settling payables. Subsequently, it decreased significantly to 37 days in 2022 and slightly rebounded to 39 days in 2023. This trend reflects an initial lengthening in payment terms followed by a contraction and stabilization around previous years' levels.

Cash Conversion Cycle

The cash conversion cycle shows variability but a decreasing trend overall. It started at 19 days in 2019 and increased to 31 days in 2020. Thereafter, it decreased markedly to 16 days in 2021 and further to 12 days in 2022, representing improved efficiency in converting investments in inventory and receivables into cash. The figure rose slightly to 16 days in 2023, suggesting a minor decrease in operational efficiency relative to the prior year.