Weatherford International PLC (WFRD)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.27 | 0.59 | 0.45 | 0.48 | 2.66 |
| Receivables turnover | 4.37 | 4.13 | 4.38 | 4.42 | 4.46 |
| Payables turnover | 0.30 | 0.68 | 0.68 | 0.84 | 5.86 |
| Working capital turnover | 3.23 | 3.40 | 2.75 | 2.31 | 2.03 |
Weatherford International PLC's activity ratios show varying trends over the years.
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company manages its inventory. Weatherford's inventory turnover decreased significantly from 2.66 in 2020 to 0.27 in 2024. This indicates that the company is holding onto its inventory for a much longer period in recent years, which may lead to higher carrying costs and potential obsolescence.
2. Receivables Turnover:
- The receivables turnover ratio reflects how quickly the company collects its accounts receivables. Weatherford's receivables turnover remained relatively stable, ranging from 4.13 to 4.46 over the five-year period. This suggests that the company maintains a consistent collection process for its sales.
3. Payables Turnover:
- The payables turnover ratio measures how quickly the company pays its suppliers. Weatherford's payables turnover decreased significantly from 5.86 in 2020 to 0.30 in 2024. This indicates that the company is taking longer to settle its payables, which may result in strained supplier relationships or potential liquidity issues.
4. Working Capital Turnover:
- The working capital turnover ratio indicates how efficiently the company utilizes its working capital to generate revenue. Weatherford's working capital turnover improved from 2.03 in 2020 to 3.23 in 2024, showing a positive trend in utilizing its working capital more effectively over the years.
In conclusion, Weatherford International PLC's activity ratios reflect a mixed performance in managing its inventory, receivables, payables, and working capital. The company may need to address the significant decline in inventory turnover and payables turnover to improve operational efficiency and financial health.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 1,366.81 | 621.21 | 803.47 | 764.22 | 137.31 |
| Days of sales outstanding (DSO) | days | 83.61 | 88.36 | 83.35 | 82.61 | 81.82 |
| Number of days of payables | days | 1,230.13 | 535.28 | 536.42 | 433.44 | 62.24 |
Weatherford International PLC's activity ratios indicate significant changes in the efficiency of its operations over the years:
1. Days of inventory on hand (DOH) increased from 137.31 days in 2020 to 1,366.81 days in 2024. This sharp rise implies that the company is holding inventory for a longer period, possibly indicating inefficiencies in managing inventory levels or a decrease in sales turnover.
2. Days of sales outstanding (DSO) remained relatively stable over the years, ranging from 81.82 days in 2020 to 83.61 days in 2024. This suggests that Weatherford International PLC has been successful in collecting its accounts receivable within a consistent timeframe.
3. Number of days of payables saw a drastic increase from 62.24 days in 2020 to 1,230.13 days in 2024. This significant extension in the payment period to suppliers indicates a potential strategy to conserve cash or manage liquidity, but it may also strain relationships with suppliers in the long run.
Overall, the analysis of these activity ratios indicates fluctuations in the efficiency and effectiveness of Weatherford International PLC's operating cycle and working capital management over the years, raising potential concerns about inventory management and supplier relationships.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.19 | 5.25 | 4.72 | 3.66 | 2.98 |
| Total asset turnover | 1.07 | 0.99 | 0.92 | 0.76 | 0.68 |
The Fixed Asset Turnover ratio for Weatherford International PLC has shown a consistent improvement over the years, increasing from 2.98 in 2020 to 5.19 in 2024. This indicates that the company has been able to generate more sales revenue from its fixed assets, such as property, plant, and equipment, which is a positive sign of operational efficiency and asset utilization.
Furthermore, the Total Asset Turnover ratio has also displayed an upward trend, rising from 0.68 in 2020 to 1.07 in 2024. This suggests that Weatherford International has been more effective in utilizing all its assets to generate sales, reflecting improved overall asset management and productivity.
Overall, the increasing trend in both Fixed Asset Turnover and Total Asset Turnover ratios indicates that Weatherford International PLC has been able to efficiently utilize its assets to generate sales revenue and improve its operational performance over the years.