Baker Hughes Co (BKR)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Inventory turnover 0.63 0.56 0.58 0.59 0.63 0.62 0.67 0.72 0.74 0.82 0.77 0.69 0.72 0.79 0.82 0.81 4.47 4.21 4.07 4.17
Receivables turnover 3.88 3.87 3.76 3.74 3.53 3.69 3.52 3.39 3.43 3.66 3.62 3.53 3.57 3.77 3.71 3.73 3.61 3.78 3.94 3.82
Payables turnover 0.68 0.67 0.64 0.68 0.72 0.75 0.80 0.81 0.79 0.88 0.83 0.76 0.76 0.93 0.96 0.98 5.59 5.41 5.18 4.74
Working capital turnover 6.55 7.10 7.94 7.93 7.54 6.89 6.47 5.66 5.82 4.20 4.18 3.64 3.40 3.63 3.51 3.37 3.26 4.68 4.50 5.20

Based on the provided data for Baker Hughes Co's activity ratios, let's delve into the analysis:

1. Inventory Turnover: The inventory turnover ratio shows a declining trend over the years, indicating that Baker Hughes is managing its inventory less efficiently. The ratio, which was around 4 in the initial periods, has decreased to approximately 0.6 towards the end of the period. This suggests that the company's inventory is turning over more slowly, potentially leading to excess stock and tying up capital.

2. Receivables Turnover: The receivables turnover ratio demonstrates a fluctuating pattern over the years. The ratio ranges from approximately 3.4 to 3.9, reflecting the number of times Baker Hughes collects outstanding receivables during a year. A higher turnover indicates quicker collection of receivables, which is essential for maintaining healthy cash flow and liquidity.

3. Payables Turnover: The payables turnover ratio also fluctuates but generally shows a decreasing trend across the periods. The ratio, which was initially around 5, drops to approximately 0.6 by the end of the period. This suggests that Baker Hughes is taking longer to pay its suppliers, potentially affecting its relationship with them and signaling a need for closer attention to managing payables effectively.

4. Working Capital Turnover: The working capital turnover ratio depicts an increasing trend over the years, indicating an improvement in how efficiently Baker Hughes utilizes its working capital to generate revenue. The ratio increases from around 3 to nearly 8, reflecting that the company is generating more revenue for each unit of working capital employed.

Overall, while working capital turnover shows improvement, Baker Hughes needs to focus on optimizing its inventory management and maintaining a balance between collecting receivables promptly and managing payables efficiently to enhance its overall operational efficiency and financial performance.

Average number of days

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 583.67 648.09 629.12 623.40 576.53 585.98 547.78 503.57 490.41 447.11 472.22 529.21 510.13 459.75 444.84 448.18 81.69 86.66 89.69 87.51
Days of sales outstanding (DSO) days 94.08 94.21 96.95 97.64 103.54 98.97 103.64 107.64 106.33 99.63 100.81 103.35 102.10 96.71 98.39 97.77 101.06 96.48 92.65 95.60
Number of days of payables days 535.13 546.57 570.57 536.52 506.02 486.71 459.04 448.54 459.51 413.29 438.65 478.72 480.13 393.08 379.47 371.75 65.26 67.52 70.49 77.03

Baker Hughes Co's activity ratios provide insights into the efficiency of its operations.

1. Days of Inventory on Hand (DOH): The trend in DOH indicates the number of days the company takes to sell its inventory. Over the period from March 31, 2020, to December 31, 2024, the DOH increased from 87.51 days to 583.67 days. This suggests a significant increase in the time it takes for Baker Hughes to sell its inventory, indicating potential inefficiencies in inventory management.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect its accounts receivable. From March 31, 2020, to December 31, 2024, the DSO fluctuated but showed a general decreasing trend over the period. This indicates an improvement in the company's ability to collect receivables efficiently.

3. Number of Days of Payables: This ratio represents the number of days it takes the company to pay its suppliers. From March 31, 2020, to December 31, 2024, the days of payables increased initially before fluctuating. The company appears to be taking longer to pay its suppliers, indicating a potential strain on supplier relationships or cash flow management.

Overall, the analysis of Baker Hughes Co's activity ratios reveals challenges in inventory management efficiency, improvements in accounts receivable collection, and potential strains in managing payables over the period examined.

Long-term

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Fixed asset turnover 5.39 5.21 5.36 5.21 5.10 5.03 4.79 4.73 4.51 4.67 4.45 4.22 4.14 4.03 3.94 3.81 3.79 3.86 3.89 3.91
Total asset turnover 0.72 0.71 0.72 0.69 0.68 0.66 0.63 0.61 0.60 0.62 0.60 0.58 0.57 0.56 0.55 0.53 0.53 0.57 0.59 0.63

Baker Hughes Co's fixed asset turnover ratio has shown a consistent upward trend from 3.91 on March 31, 2020, to 5.39 on December 31, 2024, indicating that the company is generating more revenue per dollar invested in fixed assets. This suggests an efficient utilization of fixed assets to generate sales over time.

On the other hand, the total asset turnover ratio experienced fluctuations but generally increased from 0.63 on March 31, 2020, to 0.72 on December 31, 2024. This indicates that Baker Hughes is generating more sales relative to its total assets, showing improvement in asset utilization efficiency over the years.

Overall, both fixed asset turnover and total asset turnover ratios demonstrate positive trends, reflecting improved efficiency in asset utilization and revenue generation for Baker Hughes Co.