Baker Hughes Co (BKR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.63 | 0.75 | 0.72 | 4.51 | 0.77 |
| Receivables turnover | 3.58 | 3.43 | 3.58 | 3.57 | 3.66 |
| Payables turnover | 0.72 | 0.80 | 0.77 | 5.65 | 0.83 |
| Working capital turnover | 7.65 | 5.82 | 3.40 | 3.23 | 4.51 |
The activity ratios of Baker Hughes Co over the years show fluctuations in efficiency in managing its inventory, receivables, payables, and working capital.
Inventory Turnover:
- The inventory turnover ratio indicates the number of times inventory is sold and replaced during a period.
- Baker Hughes Co's inventory turnover has ranged between 3.65 and 4.21 over the past five years, with the highest being in 2021. This suggests a moderate efficiency in managing and selling inventory.
Receivables Turnover:
- The receivables turnover ratio reflects how efficiently the company collects outstanding receivables from customers.
- Baker Hughes Co's receivables turnover has been relatively stable, fluctuating between 3.55 and 3.72. This indicates a consistent ability to collect receivables over the years.
Payables Turnover:
- The payables turnover ratio shows how quickly the company pays its suppliers.
- Baker Hughes Co's payables turnover has varied between 3.90 and 4.96, with the lowest being in 2022. This suggests some inconsistency in payment cycles to suppliers.
Working Capital Turnover:
- The working capital turnover ratio measures how effectively the company is utilizing its working capital to generate revenue.
- Baker Hughes Co's working capital turnover has shown significant variation, with the highest in 2023. This may indicate improvements in efficiency in utilizing working capital for revenue generation.
In conclusion, Baker Hughes Co has shown mixed efficiency in managing its inventory, receivables, payables, and working capital over the years, with some areas performing better than others. Further analysis and comparison with industry benchmarks may provide additional insights into the company's performance in these areas.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 576.35 | 486.00 | 506.39 | 80.85 | 475.25 |
| Days of sales outstanding (DSO) | days | 101.95 | 106.33 | 102.09 | 102.15 | 99.81 |
| Number of days of payables | days | 505.86 | 455.38 | 476.61 | 64.59 | 440.19 |
The activity ratios of Baker Hughes Co provide insights into its efficiency in managing inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The trend shows fluctuations in the days of inventory on hand over the past five years, ranging from 86.67 days in 2019 to 99.92 days in 2022. In 2023, the DOH decreased to 91.80 days, indicating an improvement in inventory management efficiency compared to the previous year.
- Higher DOH values suggest a longer time to sell inventory, which could tie up company resources. A decrease in DOH is generally positive, as it implies quicker inventory turnover and potentially lower storage costs.
2. Days of Sales Outstanding (DSO):
- The DSO measures the average number of days it takes for the company to collect payment after making a sale. Baker Hughes Co's DSO ranged from 98.24 days in 2019 to 102.79 days in 2022. In 2023, the DSO increased to 101.25 days, indicating a slightly slower collection of receivables compared to the previous year.
- A higher DSO suggests a longer collection period, potentially impacting cash flow and liquidity. Baker Hughes Co may need to focus on improving collection practices to shorten this cycle.
3. Number of Days of Payables:
- The days of payables represent the average number of days the company takes to pay its suppliers. Baker Hughes Co's payables days ranged from 73.64 days in 2020 to 93.62 days in 2022. In 2023, the payables days decreased to 80.57 days, reflecting a quicker payment cycle compared to the previous year.
- A shorter payable period may indicate stronger supplier relations but could also indicate a potential strain on cash flow if payments are being made too quickly. Managing payables effectively is crucial for optimizing working capital.
Overall, analyzing these activity ratios provides valuable insights into Baker Hughes Co's operational efficiency and financial health, highlighting areas where improvement may be needed to optimize working capital management and enhance overall performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.18 | 4.51 | 4.14 | 3.75 | 3.76 |
| Total asset turnover | 0.69 | 0.60 | 0.57 | 0.53 | 0.44 |
The fixed asset turnover ratio for Baker Hughes Co has shown a positive trend over the past five years, increasing from 3.82 in 2019 to 5.21 in 2023. This indicates that the company is generating more revenue relative to its investment in fixed assets, reflecting improved efficiency in utilizing its long-term assets to generate sales.
In contrast, the total asset turnover ratio has also been on an upward trajectory, from 0.45 in 2019 to 0.69 in 2023. This indicates that for every dollar invested in total assets, Baker Hughes Co is generating more sales, reflecting an overall improvement in asset utilization efficiency over the years.
Both ratios suggest that Baker Hughes Co has been effectively utilizing its long-term assets to drive revenue growth and improve overall operational efficiency. This favorable trend indicates a positive outlook for the company in terms of its ability to generate revenues from its long-term investments.