Valaris Ltd (VAL)
Current ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 1,272,200 | 1,346,200 | 1,172,900 | 1,064,400 | 1,309,700 |
| Total current liabilities | US$ in thousands | 744,300 | 504,400 | 426,800 | 830,700 | 528,500 |
| Current ratio | 1.71 | 2.67 | 2.75 | 1.28 | 2.48 |
December 31, 2023 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $1,272,200K ÷ $744,300K
= 1.71
Valaris Ltd's current ratio has shown a declining trend over the past three years. As of December 31, 2021, the company had a healthy current ratio of 2.86, indicating that it had $2.86 in current assets for every $1 in current liabilities, suggesting strong liquidity and the ability to cover short-term obligations effectively.
However, there was a significant decrease in the current ratio to 2.67 by December 31, 2022, indicating a slight deterioration in liquidity. This decline could be a cause for concern as it suggests the company may have had less flexibility in meeting its short-term obligations compared to the previous year.
Furthermore, the current ratio dropped even further to 1.71 as of December 31, 2023. This significant decrease raises red flags regarding the company's ability to cover its short-term liabilities with its current assets. A current ratio below 2.0 is generally considered a signal of potential liquidity issues.
In conclusion, the declining trend in Valaris Ltd's current ratio over the past three years indicates a potential weakening of the company's liquidity position and raises questions about its ability to meet its short-term obligations. It is essential for the company to closely monitor its liquidity management and take appropriate steps to address any potential liquidity challenges to ensure financial stability.
Peer comparison
Dec 31, 2023