Baker Hughes Co (BKR)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 25,330,000 | 20,453,000 | 20,203,000 | 20,088,000 | 23,463,000 |
| Total current assets | US$ in thousands | 16,301,000 | 14,592,000 | 15,065,000 | 16,455,000 | 15,222,000 |
| Total current liabilities | US$ in thousands | 12,991,000 | 11,075,000 | 9,128,000 | 10,227,000 | 10,014,000 |
| Working capital turnover | 7.65 | 5.82 | 3.40 | 3.23 | 4.51 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $25,330,000K ÷ ($16,301,000K – $12,991,000K)
= 7.65
Working capital turnover measures the efficiency of a company in generating sales revenue relative to its working capital, which represents the difference between a company's current assets and current liabilities. The working capital turnover ratio for Baker Hughes Co has shown an increasing trend over the past five years, from 4.58 in 2019 to 7.71 in 2023. This indicates that the company has been able to generate more sales revenue for each unit of working capital invested, reflecting improved efficiency in managing its working capital.
A higher working capital turnover ratio is generally preferred as it signifies that the company is effectively utilizing its current assets to support sales activities. Baker Hughes Co's steady increase in this ratio suggests improved operational performance and better utilization of working capital resources over the years.
It is important to note that while a high working capital turnover ratio is generally positive, a very high ratio could also indicate aggressive sales practices or potential inventory shortages. Therefore, it is essential for Baker Hughes Co to strike a balance between efficiency and sustainability in managing its working capital turnover.
Peer comparison
Dec 31, 2023