Halliburton Company (HAL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.05 | 2.06 | 2.05 | 2.31 | 2.14 |
| Quick ratio | 1.28 | 1.27 | 1.30 | 1.56 | 1.27 |
| Cash ratio | 0.43 | 0.40 | 0.44 | 0.71 | 0.58 |
Halliburton Company has shown consistent and healthy liquidity ratios over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, increased from 2.14 in 2020 to 2.31 in 2021 before slightly declining to 2.05 in 2022, remaining relatively stable at around 2.05 in subsequent years.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also demonstrated a similar trend. It rose from 1.27 in 2020 to 1.56 in 2021, followed by a slight decrease to 1.30 in 2022, and then stabilized around 1.27 to 1.28 in the years that followed.
Furthermore, the cash ratio, which provides an insight into a company's ability to cover its current liabilities with cash and cash equivalents, improved from 0.58 in 2020 to 0.71 in 2021, although declining to 0.44 in 2022. However, it remained relatively consistent between 0.40 to 0.43 in subsequent years.
Overall, the liquidity ratios of Halliburton Company indicate that the company has a strong ability to meet its short-term obligations and highlights its prudent management of liquidity resources.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -57.35 | 189.70 | -20.47 | 99.84 | 141.35 |
The cash conversion cycle (CCC) is a critical metric that reflects how efficiently a company manages its working capital. Halliburton Company's CCC has shown significant fluctuations over the years, indicating changes in its operational efficiency and liquidity management.
- In 2020, the CCC was 141.35 days, suggesting that Halliburton took over four months to convert its investments in inventory and accounts receivable into cash. This longer cycle may point to potential liquidity challenges or inefficiencies in managing working capital.
- By the end of 2021, the CCC improved to 99.84 days, indicating a more efficient conversion of assets into cash. This reduction may signify improved inventory management or better accounts receivable collection practices.
- Surprisingly, by the end of 2022, the CCC turned negative to -20.47 days, implying that Halliburton was able to convert its investments into cash exceptionally quickly. A negative CCC can be a positive sign, indicating that the company is receiving payments from customers before having to pay its suppliers.
- However, the CCC increased significantly to 189.70 days by the end of 2023, signaling a potential slowdown in the conversion of assets into cash. This increase may suggest challenges in managing working capital effectively or delays in receivables collection.
- Subsequently, by the end of 2024, the CCC decreased to -57.35 days, once again turning negative. This reversal to a negative CCC could indicate improved efficiency in cash conversion, with Halliburton having a shorter cash cycle and potentially boosting its cash flow.
Overall, the fluctuating trend in Halliburton's CCC reflects varying levels of operational efficiency and working capital management over the years, highlighting the importance of monitoring and improving cash conversion processes.