NOV Inc. (NOV)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.40 | 2.25 | 2.57 | 2.79 | 2.72 |
| Quick ratio | 1.12 | 1.15 | 1.52 | 1.62 | 1.35 |
| Cash ratio | 0.34 | 0.44 | 0.83 | 0.93 | 0.52 |
NOV Inc's liquidity ratios provide insight into the company's ability to meet its short-term obligations.
The current ratio has shown a slight fluctuation over the past five years, ranging from 2.25 in 2022 to 2.79 in 2020. The ratio has consistently been above 2, reflecting a healthy level of current assets to cover current liabilities. A current ratio of 2.40 in 2023 indicates that the company has $2.40 in current assets for every dollar of current liabilities.
The quick ratio, also known as the acid-test ratio, has remained relatively stable over the years, with values ranging from 1.51 to 2.04. This ratio excludes inventory from current assets due to its lower liquidity. A quick ratio of 1.51 in 2023 implies that the company has $1.51 in highly liquid assets to cover each dollar of current liabilities.
The cash ratio, which is the most conservative measure of liquidity, has varied significantly from 0.73 in 2023 to 1.35 in 2020. This ratio represents the firm's ability to pay off its current liabilities using only its cash and cash equivalents. A cash ratio of 0.73 in 2023 indicates that NOV Inc has $0.73 in cash for every dollar of current liabilities.
Overall, NOV Inc has maintained healthy liquidity levels, as indicated by the current, quick, and cash ratios. The company's ability to cover short-term obligations has been consistent, although there have been some fluctuations in the cash ratio. Keeping liquidity ratios at favorable levels is crucial for ensuring financial stability and meeting operational needs.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 148.44 | 143.79 | 142.53 | 135.66 | 150.71 |
The cash conversion cycle of NOV Inc has shown some fluctuations over the past five years. It increased from 150.71 days in 2019 to 148.44 days in 2023, with a peak in 2020 at 135.66 days. A shorter cash conversion cycle indicates a more efficient management of working capital as the company takes less time to convert inventory and receivables into cash.
In general, NOV Inc's cash conversion cycle has been relatively stable around the 140-150 days range, which suggests that the company is effectively managing its cash flow, inventory turnover, and accounts receivable collection. However, there may be room for further improvement to optimize working capital efficiency and accelerate cash conversion processes. It's essential for NOV Inc to continue monitoring and analyzing its cash conversion cycle to identify any areas for enhancement and maintain a healthy level of liquidity and operational efficiency.