Weatherford International PLC (WFRD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.59 | 0.45 | 0.48 | 2.66 | 3.96 |
| Receivables turnover | 4.13 | 4.38 | 4.42 | 4.46 | 3.99 |
| Payables turnover | 0.68 | 0.68 | 0.84 | 5.86 | 6.59 |
| Working capital turnover | 3.40 | 2.75 | 2.31 | 2.03 | 2.78 |
Let's analyze the activity ratios of Weatherford International plc based on the provided data:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. It indicates how many times during a period the company sells and replaces its inventory.
- Weatherford International plc's inventory turnover has slightly decreased over the three years, from 4.38 in 2022 to 4.31 in 2023. This suggests a slightly longer period required to sell and replace inventory.
2. Receivables Turnover:
- The receivables turnover ratio shows how many times a company collects its average accounts receivable during a period.
- Weatherford International plc's receivables turnover has shown a slight decline from 4.42 in 2021 to 4.22 in 2023. This may indicate a longer collection period for receivables.
3. Payables Turnover:
- The payables turnover ratio indicates how efficiently a company pays its suppliers.
- Weatherford International plc's payables turnover has decreased over the three years, showing a trend of longer payment periods to suppliers, from 7.15 in 2021 to 5.00 in 2023.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company uses its working capital to generate revenue.
- Weatherford International plc's working capital turnover has shown an increasing trend over the three years, from 2.31 in 2021 to 3.47 in 2023. This implies that the company is generating more revenue for each unit of working capital deployed.
In summary, Weatherford International plc's activity ratios indicate fluctuations in the management of inventory, accounts receivable, and accounts payable over the three-year period. The improvement in the working capital turnover ratio suggests increased efficiency in generating revenue with available working capital. Monitoring these ratios can provide insights into the company's operational efficiency and liquidity management.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 621.21 | 803.47 | 764.22 | 137.31 | 92.08 |
| Days of sales outstanding (DSO) | days | 88.36 | 83.35 | 82.61 | 81.82 | 91.43 |
| Number of days of payables | days | 535.28 | 536.42 | 433.44 | 62.24 | 55.42 |
Based on the provided data for Weatherford International plc's activity ratios, we can analyze the efficiency of the company in managing its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, it takes for the company to sell its inventory.
- Weatherford International plc's DOH has been fluctuating over the past three years, from 90.04 days in 2021 to 83.27 days in 2022 and then increasing to 84.72 days in 2023.
- The increase in DOH from 2022 to 2023 may indicate potential issues with inventory management efficiency, as it takes the company longer to sell its inventory.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects how long it takes for the company to collect payments from its customers.
- Weatherford International plc's DSO has also shown variability, with values of 82.61 days in 2021, 83.35 days in 2022, and 86.43 days in 2023.
- The increasing trend in DSO over the years suggests that the company may be facing challenges in collecting receivables promptly, which could impact its cash flow and liquidity.
3. Number of Days of Payables:
- The number of days of payables metric indicates the average number of days the company takes to pay its suppliers.
- Weatherford International plc's days of payables have steadily increased from 51.07 days in 2021 to 55.60 days in 2022 and then to 73.00 days in 2023.
- The significant increase in days of payables from 2022 to 2023 may imply that the company is taking longer to settle its payables, which could be a strategy to manage cash flow or a potential risk related to supplier relationships.
In summary, the analysis of Weatherford International plc's activity ratios suggests potential challenges in managing inventory levels, collecting receivables, and paying suppliers efficiently. It will be crucial for the company to focus on optimizing its working capital management to enhance operational performance and financial stability.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.25 | 4.72 | 3.66 | 2.98 | 2.33 |
| Total asset turnover | 0.99 | 0.92 | 0.76 | 0.68 | 0.68 |
Weatherford International plc's long-term activity ratios indicate the efficiency with which the company is utilizing its assets to generate revenue. The trend in fixed asset turnover has been improving steadily, with a notable increase from 3.66 in 2021 to 5.37 in 2023. This suggests that the company's fixed assets are being utilized more effectively to generate sales over the years.
Moreover, the total asset turnover has also shown a positive trend, increasing from 0.76 in 2021 to 1.01 in 2023. This indicates that Weatherford International plc has been able to generate more revenue relative to its total assets, reflecting an overall improvement in the company's asset utilization efficiency.
The increasing trend in both fixed asset turnover and total asset turnover ratios suggests that Weatherford International plc is making better use of its assets to drive revenue growth, which can be indicative of improved operational efficiency and potentially higher profitability in the long term.