Nabors Industries Ltd (NBR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.36 | 1.68 | 2.86 | 2.20 | 1.90 |
| Quick ratio | 1.17 | 1.31 | 2.62 | 1.81 | 1.50 |
| Cash ratio | 0.88 | 0.76 | 1.89 | 0.93 | 0.69 |
The liquidity ratios of Nabors Industries Ltd indicate the company's ability to meet its short-term obligations. The current ratio has shown a decreasing trend from 2019 to 2023, which may raise concerns about the company's short-term liquidity position. However, the current ratio remains above 1, indicating that the company can cover its current liabilities with its current assets.
The quick ratio, which excludes inventory from current assets, also demonstrates a declining trend over the years. This suggests that the company's ability to cover its short-term liabilities with its most liquid assets has weakened.
The cash ratio, measuring the company's ability to cover its current liabilities with cash and cash equivalents, shows fluctuations over the years but generally remains above 1. This implies that Nabors Industries has enough cash on hand to cover its immediate obligations, although the ratio was stronger in 2021 compared to the following years.
Overall, while the current, quick, and cash ratios all indicate some level of liquidity for Nabors Industries Ltd, the decreasing trends in these ratios suggest a potential weakening in the company's short-term liquidity position over the years. It is recommended that the company closely monitors its liquidity position and takes appropriate measures to maintain a healthy level of liquidity to meet its obligations.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 18.24 | 14.56 | 26.15 | 50.54 | 37.80 |
The cash conversion cycle of Nabors Industries Ltd has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 12.34 days from 4.26 days in 2022. This indicates that it took Nabors Industries Ltd longer to convert its investments in inventory and other resources back into cash in 2023 compared to the previous year.
In 2021, the cash conversion cycle was at its highest at 45.56 days, indicating a significant delay in the company's cash conversion process. This might suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers during that period.
The improvement seen in 2022 with a decrease to 4.26 days and in 2023 with a slight increase to 12.34 days could imply better working capital management practices implemented by the company, leading to a more efficient cash conversion cycle.
Overall, a lower cash conversion cycle is preferable as it indicates that the company is able to convert its investments back into cash more quickly, providing liquidity and financial flexibility. Monitoring and managing the cash conversion cycle can help Nabors Industries Ltd optimize its working capital and improve its overall financial performance.