Halliburton Company (HAL)

Halliburton Co. has exhibited consistent liquidity over the past five years as indicated by current, quick, and cash ratios.

1. Current Ratio: The current ratio measures the company's ability to pay its short-term obligations with its current assets. Halliburton Co.'s current ratio has remained relatively stable, averaging around 2.2 over the past five years. A current ratio above 1 indicates that the company has more current assets than current liabilities, reflecting a strong ability to meet short-term obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Halliburton Co.'s quick ratio has also remained steady, with an average of approximately 1.58 over the past five years. A quick ratio above 1 signifies that the company can cover its short-term liabilities without relying on selling inventory, which is typically a less liquid asset.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. Halliburton Co.'s cash ratio has fluctuated but generally trended upwards, showing an increasing ability to cover short-term obligations with cash on hand. The cash ratio has ranged from 0.62 to 0.91 over the past five years.

In summary, Halliburton Co. has maintained a strong liquidity position over the years, with current, quick, and cash ratios consistently above industry benchmarks and indicating the company's ability to meet its short-term financial obligations.

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See also:

Halliburton Company Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Halliburton Co. has shown a decreasing trend over the past five years, indicating improved efficiency in converting its investments in inventory and accounts receivable into cash. In 2023, the company's cash conversion cycle was 78.61 days, down from 78.95 days in 2022 and significantly lower compared to 99.56 days in 2020. This suggests that Halliburton Co. has been able to manage its inventory and receivables more effectively, resulting in a quicker turnover of its operating cycle.

A shorter cash conversion cycle implies that the company is able to generate cash more rapidly from its operational activities, which is a positive sign for its liquidity and working capital management. The decreasing trend in the cash conversion cycle over the years indicates that Halliburton Co. has been successful in optimizing its cash flow and working capital efficiency. This could potentially lead to improved profitability and financial stability for the company in the long run.