Halliburton Company (HAL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.08 | 0.24 | 0.10 | 1.92 | 1.02 |
| Receivables turnover | 4.74 | 4.38 | 4.17 | 4.65 | 4.90 |
| Payables turnover | 0.08 | 0.22 | 0.10 | 2.86 | 1.32 |
| Working capital turnover | 3.88 | 3.61 | 2.71 | 2.83 | 3.54 |
The activity ratios of Halliburton Co. provide insights into the efficiency of the company's operations in managing inventories, receivables, payables, and working capital turnover.
1. Inventory turnover: Halliburton Co. has maintained a relatively stable inventory turnover ratio over the past five years, with a range between 5.49 and 6.41. This indicates that the company is effectively managing its inventory levels and turning over its inventory multiple times throughout the year.
2. Receivables turnover: The receivables turnover ratio has shown some fluctuations over the years, ranging from 4.17 to 4.90. A higher ratio implies that the company is collecting its receivables more efficiently. Halliburton Co. has managed to maintain a moderate level of receivables turnover, indicating that it has been effective in collecting payments from customers.
3. Payables turnover: The payables turnover ratio has fluctuated notably, with a range between 5.44 and 8.27. A lower ratio suggests that the company is taking longer to pay its suppliers, while a higher ratio indicates prompt payment. Halliburton Co. exhibited varying payment patterns to its creditors over the years.
4. Working capital turnover: The working capital turnover ratio has demonstrated variability, with values ranging from 2.71 to 3.88. A higher turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales. Halliburton Co. has shown fluctuations in its ability to generate revenue relative to its working capital levels.
In conclusion, Halliburton Co.'s activity ratios highlight its ability to manage inventory, receivables, payables, and working capital effectively over the years, with some fluctuations noted in payables turnover and working capital turnover ratios.
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 | 4,599.57 | 1,532.90 | 3,651.55 | 190.28 | 356.93 |
| Days of sales outstanding (DSO) | days | 77.06 | 83.37 | 87.46 | 78.49 | 74.54 |
| Number of days of payables | days | 4,486.93 | 1,636.73 | 3,639.17 | 127.42 | 276.54 |
The activity ratios of Halliburton Co. reflect its efficiency in managing inventory, accounts receivable, and accounts payable over the past five years.
The Days of Inventory on Hand (DOH) has shown a relatively stable trend, ranging between 62.82 days to 66.46 days. This indicates that, on average, Halliburton holds inventory for around two to three months before selling it. The increase in DOH from 2019 to 2021 suggests a potential slowdown in inventory turnover, which may tie up working capital.
In terms of Days of Sales Outstanding (DSO), Halliburton's collection period has fluctuated over the years, ranging from 74.55 days to 87.49 days. A decreasing trend in DSO would indicate that the company is collecting its accounts receivable more efficiently, thereby improving cash flow. However, Halliburton experienced an increase in DSO from 2021 to 2022, suggesting a potential delay in collecting payments from customers.
The Number of Days of Payables reflects Halliburton's payment terms with its suppliers. The data shows fluctuations in this ratio, with the number of days of payables ranging from 44.11 days to 67.07 days. A longer payable period can indicate that the company is using suppliers' financing to support its operations.
Overall, the trends in these activity ratios for Halliburton Co. suggest opportunities for improvement in managing inventory turnover, accounts receivable collection, and payment terms with suppliers to enhance operational efficiency and cash flow management.
See also:
Halliburton Company Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.70 | 4.66 | 3.54 | 3.30 | 3.07 |
| Total asset turnover | 0.93 | 0.87 | 0.69 | 0.69 | 0.88 |
Halliburton Co.'s long-term activity ratios depict the efficiency with which the company utilizes its assets to generate revenue. The fixed asset turnover ratio has exhibited an increasing trend over the past five years, reaching 4.70 in 2023 from 3.07 in 2019. This indicates that Halliburton has been effectively utilizing its fixed assets to generate sales, reflecting improved efficiency in its long-term asset management.
On the other hand, the total asset turnover ratio shows a fluctuating pattern, with a notable increase in 2021 followed by a slight decline in subsequent years. Although the ratio stood at 0.93 in 2023, signalling that for each dollar of total assets, Halliburton generated $0.93 in revenue, the inconsistency in this ratio raises concerns about the company's overall asset utilization efficiency.
In conclusion, while Halliburton Co. has shown improvement in utilizing its fixed assets efficiently over the years, there is a need for the company to focus on maintaining a stable and increasing trend in its total asset turnover ratio for enhanced long-term operational efficiency and profitability.