NOV Inc. (NOV)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.55 | 3.14 | 3.26 | 3.57 | 4.02 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 2.59 | 2.52 | 2.37 | 1.85 | 1.82 |
Activity ratios provide insights into how effectively a company manages its assets and liabilities to generate revenue. Let's analyze the activity ratios of NOV Inc. based on the provided data:
1. Inventory Turnover:
- The inventory turnover ratio reflects how many times a company sells and replaces its inventory over a specific period.
- NOV Inc.'s inventory turnover has shown a gradual decline from 4.02 in 2020 to 3.55 in 2024.
- A decreasing trend in inventory turnover may indicate slower sales or inefficient inventory management.
2. Receivables Turnover:
- The receivables turnover ratio measures how many times a company collects its accounts receivable during a period.
- NOV Inc. did not provide data for receivables turnover, so further analysis on the efficiency of receivables collection cannot be conducted.
3. Payables Turnover:
- The payables turnover ratio assesses how efficiently a company pays its suppliers by comparing purchases to accounts payable.
- NOV Inc. did not provide data for payables turnover, limiting insights on its payment practices and supplier relationships.
4. Working Capital Turnover:
- The working capital turnover ratio evaluates how effectively a company utilizes its working capital to generate sales.
- NOV Inc.'s working capital turnover has increased from 1.82 in 2020 to 2.59 in 2024, indicating improved efficiency in converting working capital into revenue.
- A rising trend in working capital turnover suggests better operational efficiency and effective utilization of resources.
In conclusion, while NOV Inc. has shown improvements in working capital turnover, the declining trend in inventory turnover warrants attention to ensure optimal inventory management practices and sustained operational effectiveness. Further data on receivables and payables turnover would provide a more comprehensive analysis of the company's activity ratios.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 102.80 | 116.31 | 112.10 | 102.28 | 90.86 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data for NOV Inc., we can analyze the activity ratios as follows:
1. Days of Inventory on Hand (DOH):
- As of December 31, 2020, NOV Inc. had an inventory turnover of approximately 90.86 days.
- The DOH increased to 102.28 days by December 31, 2021, indicating that inventory is being held longer before being sold.
- The trend continues with DOH reaching 112.10 days by December 31, 2022, and further increasing to 116.31 days by December 31, 2023.
- However, there was a slight decrease in DOH to 102.80 days by December 31, 2024. Overall, the upward trend in DOH from 2020 to 2023 may suggest possible inventory management issues or inefficiencies.
2. Days of Sales Outstanding (DSO):
- The data provided does not include information on Days of Sales Outstanding (DSO) for NOV Inc. for the years analyzed. Without this data, it is challenging to assess the efficiency of the company in collecting accounts receivable.
3. Number of Days of Payables:
- Similarly, the information on the Number of Days of Payables is not available for NOV Inc. for the specified years. The days of payables can provide insights into the company's payment terms and liquidity management.
In conclusion, based on the DOH data provided, NOV Inc. experienced an increase in the Days of Inventory on Hand over the years, indicating potential challenges in inventory management. However, without information on DSO and days of payables, a complete assessment of the company's overall activity ratios and efficiency in managing working capital is limited.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 3.15 | 2.34 | 3.16 |
| Total asset turnover | 0.78 | 0.76 | 0.71 | 0.58 | 0.61 |
NOV Inc.'s fixed asset turnover ratio provides insights into how efficiently the company's fixed assets are utilized to generate sales. The ratio decreased from 3.16 in 2020 to 2.34 in 2021 but then increased to 3.15 in 2022. This variability may indicate changes in the company's asset utilization over time.
On the other hand, the total asset turnover ratio reflects how effectively the company generates sales from all its assets. The ratio declined slightly from 0.61 in 2020 to 0.58 in 2021, but then showed an upward trend, reaching 0.78 in 2024. This improvement suggests that NOV Inc. was able to generate more sales relative to its total assets in the latter years.
Overall, the trend in NOV Inc.'s long-term activity ratios indicates fluctuations in asset utilization efficiency, with potential changes in how effectively the company is using its fixed and total assets to generate sales over the years analyzed.