NOV Inc. (NOV)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.14 | 3.26 | 3.57 | 4.02 | 3.47 |
| Receivables turnover | 4.51 | 4.16 | 4.18 | 4.78 | 4.57 |
| Payables turnover | 7.47 | 6.52 | 7.76 | 11.57 | 10.68 |
| Working capital turnover | 2.52 | 2.37 | 1.85 | 1.82 | 2.19 |
The inventory turnover ratio for NOV Inc has been declining over the past five years, indicating that the company is taking longer to sell its inventory. This could be a sign of potential inefficiencies in managing inventory levels or a slowdown in sales.
On the other hand, the receivables turnover ratio has been relatively stable over the years, suggesting that the company is collecting its accounts receivable in a timely manner. A higher ratio indicates that the company is efficient in converting its credit sales into cash.
The payables turnover ratio has been fluctuating, but generally decreasing over the past five years. This may indicate that NOV Inc is taking longer to pay its suppliers, which could potentially strain relationships with vendors or indicate cash flow challenges.
The working capital turnover ratio has also shown variability over the years, with a general increasing trend. A higher working capital turnover ratio signifies that the company is generating more revenue relative to its working capital, indicating efficient use of resources.
Overall, these activity ratios provide insights into how effectively NOV Inc is managing its inventory, receivables, payables, and working capital to support its operations and generate revenue.
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 | 116.31 | 112.10 | 102.28 | 90.86 | 105.04 |
| Days of sales outstanding (DSO) | days | 81.01 | 87.71 | 87.29 | 76.36 | 79.85 |
| Number of days of payables | days | 48.88 | 56.02 | 47.03 | 31.56 | 34.19 |
NOV Inc's Days of Inventory on Hand (DOH) has shown a consistent increasing trend over the past five years, indicating that the company is holding inventory for longer periods. This may suggest potential inefficiencies in inventory management or slower inventory turnover.
In contrast, the Days of Sales Outstanding (DSO) have fluctuated over the years but have generally decreased from 2019 to 2023. A decreasing DSO implies that NOV Inc is collecting receivables more quickly, which is a positive sign of efficient accounts receivable management.
The Number of Days of Payables has also varied over the years, with a general decreasing trend from 2019 to 2023. A decreasing trend in payables days may indicate that NOV Inc is paying its creditors more quickly, which could potentially strain its cash flow position.
Overall, NOV Inc should focus on optimizing its inventory management to reduce the Days of Inventory on Hand and ensure efficient working capital management by balancing its Days of Sales Outstanding and Number of Days of Payables.
See also:
NOV Inc. 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 | 4.60 | 4.06 | 3.03 | 3.16 | 3.60 |
| Total asset turnover | 0.76 | 0.71 | 0.58 | 0.61 | 0.64 |
NOV Inc's long-term activity ratios reflect the efficiency with which the company utilizes its fixed and total assets to generate revenue over the years.
The fixed asset turnover ratio has shown an increasing trend from 2019 to 2023, indicative of the company's ability to generate more sales using its fixed assets. A value of 4.60 in 2023 implies that for every dollar invested in fixed assets, NOV Inc generated $4.60 in sales, showcasing improved efficiency in asset utilization.
On the other hand, the total asset turnover ratio has also shown an upward trajectory over the same period. This ratio indicates how efficiently the company generates revenue from all its assets. The 2023 value of 0.76 signifies that NOV Inc generated $0.76 in sales for every dollar invested in total assets, demonstrating an increase in efficiency in asset utilization compared to previous years.
Overall, the increasing trend in both the fixed asset turnover and total asset turnover ratios suggests that NOV Inc has been effectively managing its assets to generate revenue, which is a positive sign for the company's operational efficiency and financial performance.