Nabors Industries Ltd (NBR)

Nabors Industries Ltd's liquidity ratios have shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally remained above 1, indicating a healthy liquidity position. However, there was a slight decline from 2021 to 2024, suggesting a potential decrease in the company's short-term liquidity.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also exhibited fluctuations but generally remained above 1. This indicates that Nabors Industries has a sufficient level of liquid assets to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, showed a similar trend to the quick ratio. Despite some variations, the company maintained a cash ratio above 1, indicating that it had enough cash on hand to cover its short-term liabilities without relying on other current assets.

Overall, while there were some fluctuations in liquidity ratios, Nabors Industries Ltd generally maintained a sound liquidity position over the years, with the current and quick ratios staying above 1 and the cash ratio above industry standards. However, the declining trend in the current ratio from 2021 to 2024 may warrant further investigation into the company's short-term liquidity management.

---

Additional liquidity measure

Based on the data provided, the cash conversion cycle of Nabors Industries Ltd has shown a significant improvement over the years.

As of December 31, 2020, the cash conversion cycle stood at 50.54 days, indicating that on average, it took the company around 50.54 days to convert its investments in raw materials into cash from sales.

By December 31, 2021, the cash conversion cycle had decreased to 26.15 days, demonstrating a more efficient management of the company's working capital. This reduction suggests that Nabors Industries Ltd was able to shorten the time it takes to sell its products and collect the resulting cash.

Further improvement was seen by December 31, 2022, with the cash conversion cycle decreasing to 14.56 days. This indicates that the company was able to further streamline its operations, potentially by managing its inventory more effectively and collecting receivables quicker.

However, by December 31, 2023, there was a slight increase in the cash conversion cycle to 18.24 days, which could suggest a temporary slowdown in the efficiency of the company's working capital management.

Nevertheless, by December 31, 2024, the cash conversion cycle improved again to 17.48 days, showing that Nabors Industries Ltd continued to enhance its working capital efficiency.

Overall, the trend in the cash conversion cycle of Nabors Industries Ltd indicates a general improvement in the company's ability to convert its investments in raw materials and inventory into cash from sales more quickly over the years, which is a positive sign of effective working capital management.