Weatherford International PLC (WFRD)

Weatherford International PLC's liquidity ratios show a decreasing trend over the years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, declined from 2.33 in 2020 to 2.01 in 2024. This indicates a slight weakening in the firm's short-term liquidity position.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, decreased from 1.43 in 2020 to 1.28 in 2024. This implies that Weatherford International may have a slightly lower ability to meet its short-term obligations using its most liquid assets.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, also went down from 0.82 in 2020 to 0.54 in 2024. This decline suggests a reduced capacity for the company to settle its current liabilities with its cash holdings alone.

Overall, the decreasing trend in all three liquidity ratios raises concerns about Weatherford International PLC's short-term ability to meet its financial obligations. It indicates a potential need for the company to closely monitor and manage its liquidity position to ensure it can withstand any unexpected challenges in the future.

---

Additional liquidity measure

The cash conversion cycle is a key indicator of a company's efficiency in managing its working capital. In the case of Weatherford International PLC, the trend of the cash conversion cycle over the five-year period shows fluctuations:

- As of December 31, 2020, the cash conversion cycle stood at 156.88 days, indicating that Weatherford was efficiently converting its investments in inventory and receivables into cash within a relatively short time frame.
- By December 31, 2021, the cash conversion cycle significantly increased to 413.39 days, suggesting that Weatherford was taking longer to convert its resources into cash, which could be a sign of operational inefficiencies or challenges in managing working capital.
- In 2022, the cash conversion cycle decreased to 350.39 days, indicating some improvement in the efficiency of cash conversion compared to the previous year but still remaining at a relatively high level.
- By December 31, 2023, the cash conversion cycle decreased further to 174.29 days, signaling a notable improvement in converting working capital back into cash more swiftly.
- Finally, as of December 31, 2024, the cash conversion cycle increased slightly to 220.29 days, showing some lengthening in the cash conversion process compared to the previous year.

Overall, Weatherford International PLC experienced fluctuations in its cash conversion cycle over the five-year period, with significant increases followed by improvements in efficiency. It would be advisable for the company to closely monitor its working capital management practices to maintain efficient cash conversion cycles and enhance overall financial performance.