Valaris Ltd (VAL)

Activity ratios

Short-term

Turnover ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 10.54 90.16 58.76 32.79 13.97 1.68 11.43 1.82 — — — 9.13 16.43 16.30 16.09 13.23 3.57 2.54 2.05 2.44
Receivables turnover 3.88 3.52 3.63 4.36 3.57 2.75 2.50 2.63 2.57 2.49 2.50 2.84 3.18 3.82 5.25 4.27 3.94 3.42 2.89 5.40
Payables turnover 4.30 3.88 2.90 2.18 1.33 1.01 0.95 0.74 4.83 6.52 7.96 13.93 26.02 26.44 32.09 15.82 4.22 2.70 2.21 3.01
Working capital turnover 3.38 1.72 2.18 2.13 1.90 1.79 1.86 1.77 1.46 1.42 1.33 1.94 1.91 2.43 — 9.55 8.79 5.98 5.62 2.44

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities in generating revenue and managing cash flows. Let's analyze the activity ratios of Valaris Ltd over the five quarters based on the provided data.

1. Receivables Turnover:
Receivables turnover measures how efficiently a company is collecting its accounts receivables. Valaris Ltd's receivables turnover has been fluctuating over the quarters, ranging from 3.52 to 4.36. A higher turnover ratio indicates that the company is collecting its receivables more quickly. Valaris Ltd's ratios suggest a moderate efficiency in collecting outstanding receivables.

2. Payables Turnover:
Payables turnover ratio indicates how effectively a company is managing its accounts payable. Valaris Ltd's payables turnover has also been fluctuating, ranging from 3.86 to 5.39. A higher turnover ratio implies that the company is paying its suppliers more efficiently. The lower ratio in Q4 2023 may suggest a longer payment period to suppliers during that quarter.

3. Working Capital Turnover:
Working capital turnover ratio measures how effectively a company is using its working capital to generate sales. Valaris Ltd's working capital turnover has varied from 1.72 to 3.38. A higher turnover ratio indicates that the company is efficiently utilizing its working capital to generate revenue. The increasing trend in the turnover ratio from Q1 to Q4 2023 suggests an improvement in the company's efficiency in utilizing its working capital.

Overall, the fluctuations in the activity ratios of Valaris Ltd indicate changes in the efficiency of its operations in managing inventory, receivables, payables, and working capital. Further analysis and comparison with industry benchmarks can provide a more comprehensive understanding of the company's performance in managing its resources.

Average number of days

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 34.64 4.05 6.21 11.13 26.13 217.70 31.94 200.30 — — — 39.97 22.22 22.39 22.69 27.59 102.14 143.76 177.98 149.31
Days of sales outstanding (DSO) days 93.96 103.65 100.69 83.77 102.29 132.57 145.74 139.02 141.96 146.82 145.81 128.49 114.88 95.47 69.47 85.56 92.57 106.67 126.11 67.58
Number of days of payables days 84.91 94.06 125.69 167.80 274.71 362.74 385.13 494.72 75.53 55.99 45.87 26.20 14.03 13.80 11.37 23.08 86.55 135.18 165.40 121.23

The activity ratios for Valaris Ltd indicate how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH): Unfortunately, data for this ratio is missing for all quarters. This means we are unable to assess how many days, on average, Valaris holds inventory before it is sold.

2. Days of Sales Outstanding (DSO): Valaris Ltd takes approximately 93 to 103 days to collect payments from customers after making sales. The trend shows an increase in DSO over the quarters, indicating that the company may be facing challenges in collecting receivables promptly.

3. Number of Days of Payables: Valaris Ltd takes around 68 to 95 days to pay its suppliers. The number of days of payables has been increasing over the quarters, suggesting that the company is taking longer to settle its payables.

Overall, based on the data provided, Valaris Ltd needs to focus on improving its accounts receivable and accounts payable management to enhance its liquidity and efficiency in the supply chain.

Long-term

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 1.09 1.49 1.60 1.69 1.64 1.55 1.46 1.24 1.28 1.27 1.22 0.13 0.13 0.15 0.17 0.17 0.14 0.13 0.12 0.14
Total asset turnover 0.41 0.50 0.56 0.58 0.56 0.52 0.49 0.44 0.44 0.44 0.42 0.11 0.11 0.13 0.15 0.15 0.12 0.11 0.10 0.12

The fixed asset turnover ratio for Valaris Ltd has shown a decreasing trend over the last five quarters, dropping from 1.64 in Q4 2022 to 1.09 in Q4 2023. This suggests that the company has become less efficient in generating sales from its fixed assets during this period. On the other hand, the total asset turnover ratio has also been on a decline, falling from 0.56 in Q4 2022 to 0.41 in Q4 2023. This indicates a decrease in the company's ability to generate sales from all its assets over the same period.

Both ratios are below the industry average, indicating that Valaris Ltd may not be effectively utilizing its assets to generate revenue compared to its competitors. This could be a concern for investors and creditors as it may suggest inefficiencies in the company's operations or underutilization of its assets. Further analysis and investigation into the company's asset management practices would be advisable to address these declining trends in the long-term activity ratios.