Phillips 66 (NYSE:PSX)

The analysis of the financial ratios over the reported periods reveals several notable trends and fluctuations in operational efficiency and liquidity management.

Inventory Turnover Ratio

The inventory turnover ratio shows a fluctuating pattern with values ranging from a low of approximately 16.42 to a high nearing 29.02. Peaks are observed around early 2019, indicating periods of more efficient inventory management or higher sales relative to inventory levels. However, intermittent declines suggest variability in inventory handling or sales performance across quarters.

Receivables Turnover Ratio

This ratio presents a generally downward trend in some quarters with values moving between 14.55 and 23.45. Although there are some recoveries, the trend toward lower values in later periods may indicate slower collection of receivables, which could affect liquidity.

Payables Turnover Ratio

The payables turnover ratio fluctuates moderately between about 10.44 and 16.82, with no clear directional trend. This suggests a relatively stable, though somewhat variable, management of accounts payable, possibly reflecting differing payment policies or changes in supplier terms over time.

Working Capital Turnover Ratio

The working capital turnover ratio exhibits considerable variation, with notably high values in certain quarters (above 38), such as late 2015 and mid-2018, which imply enhanced efficiency in using working capital to generate sales. Lower values in other periods indicate less effective utilization, reflecting possible operational challenges or capital structure changes.

Average Inventory Processing Period (Days)

The average days inventory is held tends to range between approximately 13 and 22 days, with some improvements seen in early 2019 when the duration decreases to near the lower bound. This suggests efforts to speed up inventory turnover, aligning with periods of higher inventory turnover ratios.

Average Receivable Collection Period (Days)

The receivable collection period generally oscillates between 16 and 25 days. The increasing trend toward higher days in some quarters indicates slower collections, which may impact cash flows adversely, although intermittent improvements are noted.

Operating Cycle (Days)

The operating cycle length remains relatively stable, mostly fluctuating between 31 and 42 days, suggesting consistent overall operational timing between inventory holding and receivable collections.

Average Payables Payment Period (Days)

The payables payment period shows moderate variability between 22 and 35 days, with no clear long-term trend. This reflects consistent payment terms, though with some transient lengthening or shortening that could be attributed to strategic supplier payment management.

Cash Conversion Cycle (Days)

The cash conversion cycle remains positive and relatively short, varying between approximately 6 and 13 days. This indicates a generally efficient conversion of resource investments into cash flows. Notable increases in specific quarters point to temporary slowdowns in turning over inventory and collecting receivables relative to payable periods.

Overall, the data reveals a pattern of operational efficiency that experiences periodic improvements and setbacks across several metrics. The inventory and working capital turnover ratios show intervals of high activity suggesting strategic adjustments or market-driven changes. However, the receivables turnover and collection periods indicate occasional slowing in cash inflows from customers, which may require monitoring. Payment periods to suppliers remain fairly steady, implying stable supplier relationships. The cash conversion cycle's consistent brevity is a positive indicator of liquidity management despite intermittent fluctuations.

The cost of operating revenues exhibits a fluctuating pattern over the examined periods. Starting at approximately 17.8 billion USD in the first quarter of 2015, this figure increased significantly to peak near 23.3 billion USD in the second quarter of 2015. Subsequently, it declined to its lowest point around 12.9 billion USD in the first quarter of 2016. Following this trough, the cost showed a general upward trend reaching a high of nearly 27.6 billion USD in the third quarter of 2018, before experiencing periodic declines and increases towards the end of 2019.

Inventories display a cyclical pattern with some volatility. Beginning at about 4.2 billion USD in the first quarter of 2015, inventories generally increased to over 5.5 billion USD in the third quarter of 2018 before declining sharply to around 3.5 billion USD in the fourth quarter of the same year. The inventory value then again rose above 5.5 billion USD in the third quarter of 2019, followed by a drop to approximately 3.8 billion USD in the last quarter of 2019.

Inventory turnover ratios, which are provided from the first quarter of 2016 onward, reveal variability but some clear peaks and troughs. The ratio decreased from over 22 in early 2016 to about 16–17 for most of 2016 and 2017. A notable peak of almost 30 was observed in the first quarter of 2019, indicating a rapid inventory movement relative to cost of goods sold during that period. Other quarters in the analyzed timeframe present turnover ratios mostly fluctuating between 16 and 26, suggesting varying efficiency levels in managing inventory relative to operating costs.

Cost of Operating Revenues

Shows significant fluctuations with a general upward trend from early 2016 through 2018, peaking in late 2018 before variable declines and rises in 2019.

Inventories

Follow a cyclical, somewhat volatile pattern, with values increasing through 2018 and early 2019, followed by sharp declines in the quarters ending December 2018 and December 2019.

Inventory Turnover

Reflects substantial volatility, with the highest turnover in early 2019 suggesting efficient inventory management in that period; otherwise averages range between 16 and 26, indicating moderate inventory movement relative to operating costs.

The analysis of the quarterly financial data reveals several notable trends and fluctuations across the presented periods.

Sales and Other Operating Revenues

The sales and other operating revenues exhibit considerable variability throughout the quarters. Initially, there is an upward movement from $22,778 million in March 2015, peaking at $28,512 million in June 2015. This is followed by a decline toward the end of 2015 and early 2016, reaching a low around $17,409 million in March 2016. Subsequently, the revenues demonstrate recovery and general growth trend over the next couple of years, with some fluctuations. The highest quarterly revenue appears at $29,788 million in September 2018, followed by a slight decrease toward the end of 2018. The revenues remain relatively strong during 2019, ranging between approximately $23,103 million and $29,125 million, indicating a period of relative stability compared to earlier years.

Accounts and Notes Receivable, Net of Allowances

The accounts and notes receivable figures also display fluctuations, although with a moderate upward trajectory over the longer term. Starting at $4,717 million in March 2015, the receivables see a decrease to roughly $3,991 million by March 2016, paralleling the dip observed in revenues. After this low point, there is a general upward trend, reaching peaks above $6,000 million in several quarters, particularly from late 2017 onwards. The receivables culminate in a high of approximately $7,376 million in December 2019, suggesting increasing credit extended or a build-up in outstanding receivables relative to sales over time.

Receivables Turnover Ratio

The receivables turnover ratio, calculated as a measure of how efficiently the company collects its receivables, shows a downward trend over the periods it is reported. Beginning with a relatively high ratio of 22.44, the figure declines to as low as 14.55 by December 2019. This reduction may indicate a slower collection period or more lenient credit terms extended to customers, which aligns with the growth seen in accounts receivable balances. The fluctuations within this downward trend suggest periods of varying collection efficiency corresponding with changes in sales and receivables values.

In summary, the financial data reflects cyclical fluctuations in revenue with an overall stabilizing trend in recent years alongside a steady increase in receivables balances. The decline in receivables turnover ratio highlights a gradual decrease in collection efficiency or lengthening collection periods, which could impact liquidity management. These patterns suggest a need for close monitoring of credit policies and cash flow implications moving forward.

The cost of operating revenues demonstrates considerable variability across the quarterly periods observed. Initially, the figures rise from approximately 17,789 million USD in the first quarter of 2015 to a peak of over 23,000 million USD by mid-2015. This is followed by fluctuations and a general upward trend observed toward the end of 2017 and throughout 2018, where costs reach highs exceeding 27,000 million USD. The last quarters of 2019 maintain elevated levels, indicating sustained significant operating expenses.

Accounts payable similarly exhibit fluctuations during the period under review. Starting around 6,965 million USD, the values trend slightly downward into early 2016 but subsequently increase, reaching values above 8,400 million USD in 2018. The last several quarters show some volatility but generally maintain elevated balances above 7,000 million USD, indicating higher outstanding payments towards suppliers or creditors during these periods.

The payables turnover ratio, available from March 2016 onward, reveals variability in the efficiency with which the company settles its payables. The ratio starts at a high around 15.07 in early 2016, then declines noticeably by the third quarter of 2016 to approximately 10.44, suggesting slower payment of obligations during that period. Subsequent quarters show intermittent recoveries and decreases, with fluctuations generally between approximately 11 and 16.8. The peak ratio of 16.82 in March 2019 indicates a period of faster payment turnover, whereas other quarters reflect more moderate or slower turnover dynamics.

Together, these patterns suggest that while operating costs have generally increased over the years, the company's management of its accounts payable and payment velocity has experienced periods of both acceleration and deceleration. These fluctuations in turnover efficiency may be influenced by operational cycles, negotiating power with suppliers, or cash flow management strategies.

The analysis of the quarterly financial data reveals several notable trends and fluctuations over the observed periods.

Working Capital

The working capital exhibits a fluctuating pattern across the quarters. Starting from a high of 6,280 million US dollars at the beginning of 2015, it generally declines until the end of 2016, reaching a low point of 1,864 million in September 2016. Subsequently, working capital demonstrates recovery phases with occasional dips, for example, it rises to 4,283 million by December 2017 before falling again. The figures indicate volatility with no sustained upward or downward trajectory, suggesting possible operational or investment fluctuations impacting liquidity.

Sales and Other Operating Revenues

Sales and other operating revenues show a cyclical yet overall increasing tendency with seasonal variations. The values dropped from approximately 22,778 million in March 2015 to a low around 17,409 million in early 2016. From mid-2016 onward, the data reflects periods of growth punctuated by moderate declines, peaking at about 29,746 million in December 2017. Notably, revenues experience another growth phase throughout 2018 with minor corrections in early 2019, indicating potential market or demand variability but an overall positive revenue trend.

Working Capital Turnover Ratio

The working capital turnover ratio shows significant increases over time, starting at 20.95 in March 2015 and reaching as high as 44.41 by the end of 2016. This ratio remains relatively elevated in subsequent years, mostly fluctuating between 23.9 and 39.03. The upward trends in turnover ratio suggest improvements in the efficiency of capital utilization relative to sales, implying a stronger conversion of working capital into revenue over these periods despite the working capital’s fluctuating absolute values.

In summary, the financial data indicates fluctuating liquidity levels as reflected in the working capital figures, while sales revenues demonstrate growth with cyclical volatility. The increased working capital turnover ratio over time signals enhanced efficiency in using working capital to generate revenue, which may suggest operational optimizations or strategic adjustments. Together, these trends reflect a dynamic financial environment with efforts toward improved capital management amid varying economic conditions.

Inventory Turnover

The inventory turnover ratio demonstrates notable fluctuations over the observed periods. Initially recorded at 22.34 in March 2015, it decreased to a low of 16.42 by December 2015. Subsequent quarters experienced intermittent increases and decreases, with notable peaks at 24.77 in March 2018 and 29.02 in March 2019. The ratio ended at 26.64 in December 2019, indicating a strong improvement compared to earlier lower points. Overall, the inventory turnover reflects a cyclical pattern with periods of enhanced efficiency in inventory management, particularly showing an improving trend toward the end of the period observed.

Average Inventory Processing Period

The average inventory processing period, measured in number of days, exhibits an inverse relationship to the inventory turnover ratio, as expected. The period started at 16 days in March 2015, increased to a peak of 22 days in September and December 2015, then decreased steadily to 13 days by March 2019. Minor variations occurred, fluctuating mostly between 19 and 22 days during mid-term quarters, but the general trend shows a reduction in the inventory processing duration. This suggests improvements in operational efficiency, with inventory being processed more quickly over time, especially noticeable in the periods corresponding to higher inventory turnover ratios.

Overall Insights

The data indicates a significant improvement in inventory management efficiency through the periods analyzed. The inverse movement of inventory turnover and average inventory processing period aligns with typical operational dynamics. Peaks in inventory turnover match troughs in processing period, highlighting periods where the company optimized its inventory handling. The late 2018 to 2019 timeframe shows particularly strong performance, with the highest turnover and shortest processing days recorded, suggesting enhanced responsiveness and inventory control during this phase.

Receivables Turnover

The receivables turnover ratio shows notable fluctuations over the examined periods. Starting from 22.44 in March 2015, it increased slightly to 23.45 by June 2015, indicating efficient collection mechanisms during that time. However, a decline is observed by the end of 2015, reaching 20.18 in December. Throughout 2016 and 2017, the ratio demonstrates variability, with a general downward trend where values mostly hover between 15.37 and 19.37. This indicates that the efficiency in collecting receivables weakened somewhat compared to the earlier period. In 2018, there was a brief improvement reaching around 20.59 in the first quarter, followed by a slight decline with some oscillations during the remaining quarters. The most recent data for 2019 shows a further decrease, ending at 14.55, suggesting the company experienced increased challenges in receivable collections during this period.

Average Receivable Collection Period

The average receivable collection period, measured in days, inversely correlates with the receivables turnover ratio, as expected. It begins at 16 days in March and June of 2015, then lengthens to 19 and 18 days by the end of that year. In 2016 and 2017, the collection period expanded further, peaking at 24 days in March 2017, signifying slower collections. Subsequently, it fluctuates mostly between 19 and 23 days, with intermittent decreases indicating some periods of improved efficiency. In 2018, the days to collect receivables varied slightly, averaging roughly between 19 and 22 days. The trend changes in 2019, where the collection period extends to 25 days by the end of December, marking the longest average collection period in the dataset and reflecting a weakening in the receivables management process during this timeframe.

Overall Trends and Insights

The analysis reveals a general decline in the efficiency of receivable collections from 2015 through 2019. Early data in 2015 shows relatively high turnover with low collection periods, but there is a downward shift over time characterized by reduced turnover ratios and increased days outstanding. Oscillations in both metrics suggest periods of fluctuating performance, possibly influenced by market conditions or internal operational changes. The elongation of the average collection period late in the period may indicate emerging liquidity or credit risk challenges. Monitoring these trends is essential for maintaining healthy cash flow and mitigating credit risk associated with receivables.

The analysis of the quarterly financial data reveals patterns related to the company's inventory management, receivable collections, and overall operating cycle over the reported periods.

Average Inventory Processing Period

This metric shows some variability but remains largely within a range of approximately 13 to 22 days across the periods observed. A general pattern is noticeable where values tend to peak around mid-year quarters (June to September) and decline toward the first quarter of the subsequent year. For example, after reaching 22 days in several quarters, this period decreases to as low as 13 or 14 days by early 2019. The shorter inventory processing periods toward the end of the timeline suggest improved efficiency in managing inventory turnover.

Average Receivable Collection Period

The days outstanding for receivable collections exhibit moderate fluctuation without a clear steady trend. Periods range roughly from 16 days up to 25 days. Notably, there is a slight increasing trend over time, with collection periods starting around the low 16-day mark and moving toward the low-to-mid 20s by the end of the data set. Peaks such as 24 and 25 days indicate occasional slowdowns in collections, which could impact cash flow. However, intermittent decreases are visible, implying some attempts at or periods of improved collection efficiency.

Operating Cycle

The operating cycle, which combines both inventory and receivable periods, fluctuates between about 31 and 42 days. The data illustrates a somewhat cyclical movement, with higher operating cycle values frequently occurring around mid-year followed by reductions in the subsequent quarters. The cycle generally stabilizes near the upper 30s to low 40s for much of the timeline, indicating a consistent overall length of these combined processes. The lowest value is around 31 days in early 2019, pointing to a period of enhanced operational efficiency.

Overall, the company's operational metrics suggest periods of efficiency improvement, particularly in inventory processing, alongside some variability in receivable collection times. The operating cycle reflects these dynamics and appears to have modestly improved toward the end of the timeframe analyzed.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating pattern over the observed periods from March 31, 2015, to December 31, 2019. Initially, the ratio starts at 15.07 during March 2015, then experiences a decline reaching its lowest point at 10.44 by March 2016. Subsequently, it rises again to around the mid-twelve range across 2017 and 2018, with slight fluctuations. Notably, in the first quarter of 2019, the ratio peaks at 16.82, indicating the highest turnover rate in the timeframe examined. After this peak, the ratio settles back closer to previous levels but remains comparatively elevated relative to earlier low points towards the end of 2019.

Average Payables Payment Period

The average payables payment period inversely reflects the trend observed in the payables turnover ratio. It starts at 24 days as of March 2015 and increases to a peak of 35 days in September 2015 through March 2016, signaling a slower payment cycle early in the period. Over the subsequent years, the payment period exhibits volatility but generally stays within a range of approximately 28 to 32 days. A notable decrease occurs by March 2019, where the payment period shortens to 22 days, corresponding to the peak in payables turnover at the same time, indicating faster payments. In the later part of 2019, the days payable metric returns to about 29 days, suggesting a moderation in payment speed.

Overall Insights

The data reveal an inverse relationship between payables turnover and average payment period, consistent with financial theory, where higher turnover ratios correspond with shorter payment periods. The company appears to have experienced periods of both accelerated and decelerated payment cycles, with the most significant improvement in payment efficiency observed during early 2019. These variations may reflect changes in company payment policies, market conditions, or supplier negotiations affecting liquidity and working capital management. The fluctuations suggest dynamic management of payables to balance supplier relationships and cash flow requirements.

Inventory Processing Period

The average inventory processing period shows a fluctuating pattern over the observed quarters. Beginning at 16 days in the first available quarter, it increased to a peak of 22 days in late 2015 and early 2016. Following that, it declined to a low of 13 days in early 2019, with intermittent rises and falls between 15 to 22 days in most other quarters. Overall, there is no clear consistent upward or downward trend, but a stabilization around an average of roughly 18 to 20 days is observable in the later periods.

Receivable Collection Period

The average receivable collection period has shown a generally increasing trend through the timeframe. Initial values near 16 days gradually increased to a range of 19 to 25 days over the later quarters. Notably, this period reached its highest point of 25 days in the last quarter recorded. This suggests that the company has taken progressively longer to collect receivables, which could have implications for cash flow and working capital management.

Payables Payment Period

The accounts payable period exhibits variability without a definitive long-term trend. Starting around 24 days, the period rose to a maximum of 35 days during mid-2015 to early 2016 before declining again to 22 days by early 2019. The payment period typically fluctuated between 26 and 32 days in most other quarters. Such fluctuation indicates adjustments in payment strategies, possibly reflecting negotiations with suppliers or shifts in cash availability.

Cash Conversion Cycle

The cash conversion cycle, representing the net time taken to convert investments in inventory and other resources into cash flows, displayed modest variation around a generally low value. It fluctuated mostly between 6 and 13 days, with no significant upward or downward trend. A slight increase is visible in mid-2017 to mid-2018 periods followed by a decrease in early 2019. This relatively short cash conversion cycle suggests efficient management of working capital components overall.