Baker Hughes Co (BKR)

The liquidity ratios of Baker Hughes Co have been showing some fluctuations over the past five years. The current ratio, which indicates the company's ability to cover its short-term obligations with its current assets, has ranged from 1.25 to 1.65 during this period. A current ratio above 1 signifies that the company has more current assets than current liabilities, with a higher ratio indicating a stronger liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Baker Hughes Co's quick ratio has varied between 0.86 and 1.21 over the past five years. A quick ratio above 1 suggests that the company can meet its short-term liabilities without relying on selling inventory, with a higher ratio indicating better liquidity.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has ranged from 0.32 to 0.63 for Baker Hughes Co during the same period. A cash ratio below 1 indicates that the company does not have enough cash to cover its short-term liabilities. A higher cash ratio is generally preferred as it indicates a stronger ability to meet obligations using cash resources.

Overall, Baker Hughes Co's liquidity ratios have shown some variability over the years, with the current ratio generally above 1, the quick ratio fluctuating around 1, and the cash ratio below 1. It suggests that the company has generally maintained a satisfactory liquidity position, although closer monitoring may be required to ensure continued ability to meet short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Baker Hughes Co has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased to 112.47 days compared to the prior year, reflecting a slower conversion of inventory and receivables into cash.

In 2022, the cash conversion cycle decreased to 109.09 days, indicating an improvement in the company's ability to manage its working capital and convert it into cash more efficiently. This was a positive sign for the company's liquidity and operational efficiency.

In 2021, the cash conversion cycle was at 105.80 days, showing a further improvement from the previous year. The company continued to optimize its processes related to inventory management and accounts receivable collection.

However, in 2020, the cash conversion cycle increased significantly to 117.64 days, suggesting a potential challenge in managing working capital effectively. This could have been influenced by various factors such as changing market conditions or internal operational issues.

In 2019, the company had a cash conversion cycle of 104.63 days, which was relatively better compared to the following years. Baker Hughes Co seemed to have efficiently converted its resources into cash during that period.

Overall, the trend in Baker Hughes Co's cash conversion cycle indicates some fluctuations over the past five years, with improvements in certain years and challenges in others. Continuous monitoring and optimization of working capital management practices will be crucial for the company to enhance its liquidity and operational efficiency in the future.