Weatherford International PLC (WFRD)

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 1.79 1.86 2.03 2.01 2.07 2.21 2.18 2.22 2.19 2.13 2.51 2.32 2.33 2.33 2.05 2.05 2.07 1.16 1.18 1.36
Quick ratio 1.17 1.21 1.27 1.27 1.29 1.34 1.31 1.31 1.33 1.38 1.61 1.44 1.43 1.38 1.13 1.14 1.11 0.58 0.64 0.70
Cash ratio 0.51 0.48 0.54 0.55 0.62 0.67 0.64 0.65 0.71 0.85 0.98 0.86 0.82 0.79 0.48 0.41 0.37 0.20 0.21 0.24

Weatherford International plc's liquidity ratios, which provide insight into the company's ability to meet its short-term obligations, show a declining trend over the past eight quarters. The current ratio, measuring the company's ability to pay off its current liabilities with its current assets, has decreased from 2.22 in Q1 2022 to 1.79 in Q4 2023. Although the current ratio remains above 1, indicating the company has sufficient current assets to cover its current liabilities, the decreasing trend raises concerns about potential liquidity issues.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows a decreasing trend from 1.54 in Q1 2022 to 1.31 in Q4 2023. This indicates that Weatherford International may have difficulty meeting its short-term obligations without relying on its inventory.

Furthermore, the cash ratio, which reflects the company's ability to cover its current liabilities with its cash and cash equivalents, has also declined steadily from 0.86 in Q1 2022 to 0.66 in Q4 2023. This suggests that the company's cash position relative to its current liabilities has weakened over time, potentially limiting its ability to address immediate financial needs.

Overall, the decreasing trend in Weatherford International's liquidity ratios raises concerns about its short-term financial health and points towards a potential liquidity strain. It may be important for the company to closely monitor its liquidity position and take appropriate measures to improve its ability to meet short-term obligations.

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 174.29 288.73 394.80 354.31 345.37 386.61 378.77 405.45 413.39 263.88 227.05 176.79 179.09 133.72 122.00 137.31 121.97 131.63 111.94 100.83

The cash conversion cycle of Weatherford International plc has shown a trend of fluctuation over the past eight quarters. In Q1 2022, the cash conversion cycle was at its highest at 123.98 days, and it gradually decreased in Q2 and Q3 2022. However, in Q4 2022, there was a slight increase to 111.03 days.

Throughout 2023, the trend continued to fluctuate with the cycle length ranging from 98.15 days in Q4 2023 to 112.05 days in Q1 2023. The downward trend seen in 2022 was not sustained in 2023, as Q2 and Q3 2023 showed similar levels to the first quarter.

Analyzing the cash conversion cycle provides insights into the time it takes for Weatherford International plc to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle is generally preferable as it indicates efficient management of working capital, while a longer cycle may signal inefficiencies or challenges in effectively managing cash flows.

It is important for Weatherford International plc to monitor and manage its cash conversion cycle effectively to optimize working capital management and ensure healthy liquidity levels. Continued analysis and comparison of the cash conversion cycle over time can help identify areas for improvement and drive strategic decision-making within the company.