Schlumberger NV (SLB)

The liquidity ratios of Schlumberger Ltd. indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its current assets, has shown a slight improvement over the past five years, from 1.19 in 2019 to 1.32 in 2023. This indicates that Schlumberger's current assets are sufficient to cover its current liabilities, with a notable increase in the most recent year.

The quick ratio, which provides a more stringent measure by excluding inventory from current assets, has also exhibited an upward trend, reaching 1.00 in 2023 from 0.87 in 2019. This suggests that the company has a healthier level of readily available liquid assets to cover its short-term obligations.

The cash ratio, representing the proportion of cash and cash equivalents to current liabilities, has fluctuated over the years but has generally shown an increasing trend, rising to 0.41 in 2023 from 0.28 in 2019. This indicates that Schlumberger has enhanced its ability to meet its short-term obligations using cash and cash equivalents.

Overall, the trend in Schlumberger's liquidity ratios displays an improving liquidity position, with the company becoming more capable of meeting its short-term liabilities using its current and liquid assets. Nevertheless, it is essential to consider the specific industry and business circumstances when assessing the adequacy of these liquidity ratios.

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See also:

Schlumberger NV Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferable as it indicates that the company is able to quickly recover its investment in inventory and generate cash from its sales.

Schlumberger Ltd.'s cash conversion cycle has fluctuated over the past five years, ranging from 77.51 days in 2019 to 92.61 days in 2022. In 2023, the cash conversion cycle decreased to 82.95 days. This trend indicates some variability in the company's ability to efficiently convert its investments in inventory and receivables into cash.

A high cash conversion cycle can potentially indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers. It may also reflect longer sales cycles or difficulties in converting sales into cash. Conversely, a low cash conversion cycle may suggest that the company is managing its working capital effectively and is able to quickly convert its resources into cash.

Overall, Schlumberger Ltd.'s cash conversion cycle has shown some variability in recent years, and further analysis of its working capital management practices and sales and collection processes would be necessary to fully understand the factors driving these fluctuations.