NOV Inc. (NOV)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.46 | 2.57 | 2.61 | 2.50 | 2.40 | 2.39 | 2.35 | 2.35 | 2.25 | 2.30 | 2.35 | 2.50 | 2.57 | 2.67 | 2.71 | 2.58 | 2.79 | 2.85 | 2.86 | 2.73 |
| Quick ratio | 0.52 | 0.43 | 0.37 | 0.21 | 0.34 | 0.22 | 0.25 | 0.34 | 0.44 | 0.44 | 0.56 | 0.71 | 0.83 | 0.93 | 0.89 | 0.86 | 0.93 | 0.82 | 0.74 | 0.52 |
| Cash ratio | 0.52 | 0.43 | 0.37 | 0.21 | 0.34 | 0.22 | 0.25 | 0.34 | 0.44 | 0.44 | 0.56 | 0.71 | 0.83 | 0.93 | 0.89 | 0.86 | 0.93 | 0.82 | 0.74 | 0.52 |
NOV Inc.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet its short-term obligations.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a stable trend over the analyzed period, ranging from 2.25 to 2.86. This indicates that NOV Inc. has a comfortable level of current assets to cover its current liabilities.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, shows a declining trend from 0.21 to 0.93 over the period. This indicates that NOV Inc. may have a decreasing ability to cover its short-term liabilities with its most liquid assets.
The cash ratio, which is the most conservative measure of liquidity focusing solely on cash and cash equivalents, shows a similar trend to the quick ratio, declining from 0.21 to 0.93. This suggests that NOV Inc. may have a decreasing ability to cover its liabilities using only its cash reserves.
Overall, NOV Inc. has a strong current ratio, but its quick ratio and cash ratio show a decreasing trend over time, which may indicate potential liquidity challenges in the future if the trend continues. It would be advisable for NOV Inc. to closely monitor its liquidity position and take appropriate measures to ensure it can meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 104.81 | 114.63 | 116.55 | 120.57 | 116.30 | 127.20 | 126.64 | 121.43 | 112.10 | 114.63 | 111.18 | 105.31 | 102.28 | 100.17 | 98.14 | 97.31 | 90.86 | 103.26 | 102.07 | 97.47 |
The cash conversion cycle of NOV Inc. provides insight into how efficiently the company manages its working capital. The trend in the cash conversion cycle from March 31, 2020, to December 31, 2024, shows some fluctuations.
The cash conversion cycle increased from 97.47 days on March 31, 2020, to 126.64 days on June 30, 2023, indicating a potential inefficiency in managing cash, inventory, and receivables during this period. However, there was a notable improvement as the cash conversion cycle decreased to 104.81 days by December 31, 2024.
It is crucial for NOV Inc. to monitor and manage its cash conversion cycle effectively to optimize its liquidity position and working capital management. By efficiently managing the cash conversion cycle, the company can improve its cash flow, reduce financing costs, and enhance its overall financial performance. Further analysis and comparison with industry benchmarks would provide a more comprehensive evaluation of NOV Inc.'s working capital management efficiency.