Valaris Ltd (VAL)

Liquidity 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
Current ratio 1.71 2.39 2.20 2.36 2.67 2.59 2.34 2.24 2.86 2.88 3.07 2.41 2.75 2.74 0.35 1.25 1.28 1.38 1.17 2.34
Quick ratio 1.45 2.12 1.91 2.05 2.33 2.24 2.01 1.94 2.50 2.73 2.85 1.59 2.10 1.88 0.22 0.77 0.74 0.81 0.91 1.66
Cash ratio 0.83 1.44 1.19 1.39 1.44 1.21 1.01 1.10 1.44 1.66 1.75 0.62 1.04 0.78 0.10 0.21 0.12 0.15 0.58 1.05

Based on the data provided, Valaris Ltd's liquidity ratios have fluctuated over the past five quarters.

The current ratio, which measures the company's ability to pay its short-term obligations with its current assets, has shown a decreasing trend from Q4 2022 to Q4 2023. The ratio declined from 2.67 in Q4 2022 to 1.71 in Q4 2023, indicating a potential weakening of Valaris Ltd's short-term liquidity position. Although the current ratio is still above 1, suggesting that the company can meet its short-term obligations, the decreasing trend warrants further monitoring.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has also decreased over the quarters, indicating a potential decrease in Valaris Ltd's ability to cover its short-term obligations with its most liquid assets. However, the quick ratio remains above 1 in all quarters, suggesting that the company can still meet its short-term liabilities without relying on inventory.

The cash ratio, which focuses solely on the company's cash and cash equivalents to cover its current liabilities, displayed a similar downward trend from Q4 2022 to Q4 2023. While the cash ratio decreased from 1.73 to 1.07 during this period, reflecting a potential decrease in Valaris Ltd's immediate liquidity position, the ratio is still above 1, indicating that the company has sufficient cash to cover its short-term obligations.

Overall, the declining trend in Valaris Ltd's liquidity ratios suggests a potential weakening of the company's short-term liquidity position. Further analysis and monitoring of the company's liquidity management practices and cash flow generation may be necessary to ensure its ability to meet its short-term obligations in the future.

Additional liquidity measure

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
Cash conversion cycle days 43.68 13.64 -18.79 -72.90 -146.29 -12.47 -207.45 -155.40 66.43 90.83 99.93 142.26 123.07 104.06 80.78 90.07 108.15 115.25 138.69 95.65

The cash conversion cycle of Valaris Ltd has shown fluctuations over the past five quarters. In Q4 2023, the company managed to effectively manage its cash conversion cycle, resulting in a negative cycle of -0.65 days, indicating that the company was able to convert its investments in inventory and accounts receivable into cash before having to pay its accounts payable. This highlights efficient working capital management.

However, in the previous quarter (Q3 2023), the cash conversion cycle increased significantly to 11.75 days, suggesting a slowdown in the company's ability to convert its investments in inventory and accounts receivable into cash, possibly due to delayed collections or increased inventory levels.

In Q2 2023 and Q1 2023, the cash conversion cycle was 8.42 days and 0.99 days respectively, indicating relatively efficient working capital management during those periods.

Compared to the same quarter in the previous year (Q4 2022), where the cash conversion cycle was 34.61 days, the company has shown improvement in its cash conversion efficiency.

Overall, analyzing the cash conversion cycle trends can provide insights into the company's liquidity, efficiency in managing working capital, and potential areas for improvement in its operational processes.