Halliburton Co. (NYSE:HAL)

Finished Products and Parts

The values of finished products and parts exhibit a declining trend from 2014 through 2016, dropping from 2,606 million USD to 1,388 million USD. However, from 2016 onward, there is a gradual recovery, with values increasing to 1,547 million USD in 2017 and further to 1,947 million USD by the end of 2018. This pattern suggests an initial reduction in finished inventory holdings followed by a replenishment or buildup in later years.

Raw Materials and Supplies

The raw materials and supplies inventory shows a decline from 754 million USD in 2014 to 548 million USD in 2015. After this dip, the inventory level experienced a consistent increase over the following three years, reaching 934 million USD in 2018. This indicates a possible strategic decision to increase raw materials availability, which may reflect expectations of higher production or supply chain adjustments.

Work in Process

Work in process inventory values decreased from 211 million USD in 2014 to 109 million USD in 2016, suggesting improved efficiency or reduced production activity during this period. Following this, the work in process inventory shows a modest increase to 146 million USD in 2017 and a slight rise to 147 million USD in 2018, pointing to a stabilization or slight increase in ongoing production activities.

Total Inventories

Total inventories decreased notably from 3,571 million USD in 2014 to 2,275 million USD in 2016. Afterward, total inventories stabilized and increased moderately to 3,028 million USD by 2018. This overall pattern mirrors the individual components, indicating a strategic reduction in inventory levels followed by a cautious rebuilding phase.

Inventories

The reported inventory values decreased significantly from $3,571 million at the end of 2014 to a low of $2,275 million in 2016, followed by a slight increase reaching $3,028 million by 2018. Adjusted inventories, accounting for LIFO reserve, show a similar pattern with values close to the reported figures. Overall, inventories declined sharply in the first three years, then showed a recovery trend towards the end of the period.

Current Assets

Reported current assets experienced a marked increase from $15,068 million in 2014 to a peak of $21,609 million in 2015, followed by a steep decline to $11,677 million in 2016 and further slight decreases to about $11,151 million in 2018. Adjusted current assets closely parallel the reported figures, indicating minimal impact from LIFO reserve adjustments. This suggests a volatile current asset base with a pronounced peak in 2015 and a sustained lower level thereafter.

Total Assets

Total assets increased from $32,240 million in 2014 to $36,942 million in 2015, then declined sharply to around $27,000 million in 2016, continuing to decrease marginally before stabilizing near $26,000 million in 2018. Adjusted total assets mirrors this trend with negligible differences, reflecting the overall asset fluctuations primarily driven by changes other than inventory valuation effects.

Shareholders’ Equity

Shareholders’ equity declined from $16,267 million in 2014 to $9,409 million in 2016, representing a substantial reduction over two years. It further decreased slightly to $8,322 million in 2017, with a notable recovery to $9,522 million by 2018. Adjusted equity values are marginally higher but essentially portray the same downward trend followed by partial recovery, indicating pressures on net worth during the middle years with some recuperation by the end of the period.

Net Income (Loss)

Net income exhibited considerable volatility, with a strong positive figure of $3,500 million in 2014 followed by losses in subsequent years: -$671 million in 2015 and a significant loss of -$5,763 million in 2016. The losses diminished considerably in 2017 to -$463 million, with a return to profitability at $1,656 million in 2018. Adjusted net income values closely follow reported results, underscoring consistent recognition of earnings fluctuations. The pattern reveals a cycle of pronounced operational difficulties culminating in 2016, with a gradual financial turnaround thereafter.

Current Ratio

The current ratio exhibited a notable increase in 2015, reaching 4.03 from 2.56 in 2014, indicating a stronger short-term liquidity position. However, this ratio declined consistently over the next three years, falling to 2.32 in 2018. The adjusted current ratio values closely mirror the reported figures, suggesting minimal impact from inventory LIFO reserve adjustments on liquidity metrics.

Net Profit Margin

There was a significant deterioration in profitability from 2014 to 2016. The reported net profit margin dropped drastically from 10.65% in 2014 to -36.27% in 2016, indicating substantial losses. Margins improved in subsequent years but remained negative in 2017 before rising to 6.9% in 2018. Adjusted figures show a similar trend with slight variations, suggesting inventory accounting adjustments had negligible effects on profitability measurements.

Total Asset Turnover

The total asset turnover ratio declined sharply from 1.02 in 2014 to 0.59 in 2016, reflecting reduced efficiency in using assets to generate revenues. The ratio improved moderately in 2017 and 2018, reaching 0.92, indicating a partial recovery in operational efficiency. Adjusted figures are identical, implying no material effect from inventory adjustments on asset utilization.

Financial Leverage

Financial leverage trended upward from 1.98 in 2014 to a peak of 3.01 in 2017, suggesting increased reliance on debt financing over this period. A slight decrease occurred in 2018, with leverage dropping to 2.73. Adjusted leverage closely parallels reported values, indicating that adjustments for inventory valuation do not materially impact leverage calculations.

Return on Equity (ROE)

ROE experienced significant volatility, starting at a healthy 21.52% in 2014, falling sharply into negative territory in 2015 and 2016, with a nadir near -61% in 2016. This indicates considerable erosion of shareholder value during those years. The metric remained negative in 2017 but improved to 17.39% by 2018. Adjusted ROE aligns closely with reported figures, confirming that inventory adjustments have a negligible effect on this profitability measure.

Return on Assets (ROA)

ROA followed a pattern similar to ROE and net margin. It declined from 10.86% in 2014 to -21.34% in 2016, reflecting declining asset profitability. Partial recovery occurred through 2017 and 2018, reaching 6.37% in 2018. The adjusted ROA values are nearly identical to the reported ones, signifying minimal influence of inventory LIFO reserve adjustments on asset returns.

The financial data presents a comparative overview of reported and inventory LIFO reserve adjusted figures related to current assets and current ratios over a five-year period ending in 2018.

Current assets trends

Reported current assets experienced a significant increase from 15,068 million US dollars in 2014 to 21,609 million in 2015, followed by a sharp decrease to 11,677 million in 2016. Subsequently, there is a gradual decline to 10,777 million in 2017, then a slight recovery to 11,151 million in 2018. The adjusted current assets largely mirror this pattern, showing very close figures with minimal differences attributable to inventory LIFO reserve adjustments.

Current ratio trends

The reported current ratio follows a similar pattern to current assets, rising from 2.56 in 2014 to a peak of 4.03 in 2015, indicating a stronger short-term liquidity position that year. This is followed by a decline to 2.9 in 2016 and further decreases to 2.22 in 2017, then a minor increase to 2.32 in 2018. The adjusted current ratio values remain very close to the reported ones, again showing minimal influence from inventory LIFO reserve adjustments.

Insights

The data indicates that the company’s liquidity saw a marked improvement in 2015, with both reported and adjusted current assets and current ratio peaking. However, this improvement was short-lived as liquidity metrics dropped in subsequent years, reaching their lowest points in 2017 before slightly improving in 2018. The close alignment between reported and adjusted figures suggests that the inventory LIFO reserve adjustments had a negligible effect on the measurement of current assets and liquidity ratios over these years.

The financial performance data over the five-year period illustrates significant volatility in profitability, with notable fluctuations in net income and profit margins.

Net Income Trends

The reported net income attributable to the company began positively in 2014 with a substantial profit of 3,500 million US dollars. However, this figure turned negative in the subsequent years, with losses escalating to -671 million in 2015 and a notably larger loss of -5,763 million in 2016. Slight improvement was observed in 2017, though the loss of -463 million still indicated a challenging financial environment. In 2018, the company returned to profitability, reporting a net income of 1,656 million. The adjusted net income figures follow an almost identical pattern, showing the impact of LIFO reserve adjustments to be marginal across this period.

Net Profit Margin Analysis

The reported net profit margin reflects a similar pattern to net income, starting at a healthy 10.65% in 2014 before plunging into negative territory with margins of -2.84% in 2015 and a major decline to -36.27% in 2016. A minor recovery occurred in 2017 with margins rising to -2.25%, followed by a positive margin of 6.9% in 2018. Adjusted net profit margins closely mirror the reported values, with only slight variations indicating minor impacts from inventory LIFO reserve adjustments on overall profitability percentages.

Overall Observations

Over the examined period, the company exhibited substantial financial instability, particularly between 2015 and 2017, marked by sizeable losses and negative margins. The recovery in 2018 suggests operational improvements or changes in market conditions leading to restored profitability. The minimal difference between reported and adjusted figures indicates that inventory accounting adjustments related to LIFO reserves did not significantly alter the financial results reported under standard accounting measures.

The analysis of the annual financial data reveals several notable trends in the company's asset base and efficiency ratios over the five-year period ending December 31, 2018.

Total Assets

Reported total assets showed fluctuations, initially increasing from approximately 32,240 million US dollars in 2014 to 36,942 million in 2015, representing significant asset growth. However, a substantial decline followed in 2016 to 27,000 million, continuing a downward trajectory through 2017 and 2018, where assets stabilized near 25,985 and 26,006 million respectively after adjustment for the LIFO reserve. The adjusted total assets closely mirror the reported figures, indicating a minor impact of the inventory LIFO reserve adjustment on the total assets reported.

Total Asset Turnover

The reported total asset turnover ratio illustrates a notable decrease in asset efficiency from 1.02 in 2014 to 0.64 in 2015, with a further decline to 0.59 in 2016. Beginning in 2017, there is an improvement in turnover efficiency, rising to 0.82 and further increasing to 0.92 by 2018. This trend indicates an initial reduction in how effectively assets generated sales, followed by a gradual recovery toward higher efficiency levels. The adjusted total asset turnover ratios align exactly with the reported turnover, reflecting negligible adjustment effects from the LIFO inventory changes on operational efficiency metrics.

Overall, the data suggests a period of asset base contraction following an initial increase, while asset utilization experienced a downturn and later a recovery phase. The LIFO reserve adjustments had minimal influence on the reported asset values and turnover ratios, implying stability in these metrics regardless of inventory accounting methods.

Reported Total Assets

The reported total assets displayed an initial increase from 32,240 million USD in 2014 to 36,942 million USD in 2015. This was followed by a sharp decline over the next two years, dropping to 27,000 million USD in 2016 and further to 25,085 million USD in 2017. Thereafter, a slight recovery to 25,982 million USD was observed in 2018.

Adjusted Total Assets

The adjusted total assets closely mirrored the trend in reported assets with minor differences in 2014 and 2016 to 2018. The adjustment raised total assets marginally by 38 million USD in 2014 and by small increments in subsequent years, maintaining a consistent pattern of increase and subsequent decline similar to the reported figures.

Reported Shareholders’ Equity

The reported shareholders’ equity showed a declining trend from 16,267 million USD in 2014 to a significant low of 8,322 million USD in 2017. In 2018, equity increased slightly to 9,522 million USD, indicating some recovery but remaining well below the initial levels.

Adjusted Shareholders’ Equity

Adjusted equity values were marginally higher than the reported figures in 2014 and from 2016 through 2018, but identical in 2015. The overall trend followed the reported data closely, with a noticeable decline reaching the nadir in 2017 and partial recovery in 2018.

Reported Financial Leverage

The reported financial leverage ratio exhibited a rising trend from 1.98 in 2014 to a peak of 3.01 in 2017, indicating increasing use of debt relative to equity during this period. In 2018, leverage decreased to 2.73, suggesting a reduction in financial risk or deleveraging efforts.

Adjusted Financial Leverage

Adjusted leverage ratios were nearly identical to reported ratios, showing the same increasing trend from 2014 through 2017 and the subsequent decrease in 2018. This consistency implies that the inventory LIFO reserve adjustment had minimal impact on the leverage calculation.

Net Income (Loss) Trends

The net income attributable to the company showed significant volatility during the period. In 2014, the company reported a strong positive net income of approximately $3.5 billion. However, this was followed by substantial losses in the next three years, with the lowest point occurring in 2016 at a loss of about $5.76 billion. In 2018, the company returned to profitability with a net income of approximately $1.65 billion. The adjusted net income figures follow a similar pattern, indicating minimal impact of inventory LIFO reserve adjustments on reported profit trends.

Shareholders’ Equity

Shareholders’ equity exhibits a declining trend from 2014 through 2017. Starting at around $16.3 billion in 2014, it declined steadily reaching its lowest value of approximately $8.3 billion in 2017. A modest recovery is observed in 2018, with equity increasing to about $9.5 billion. The adjusted shareholders’ equity shows values very close to the reported equity, reflecting minor effects from the LIFO reserve adjustments on shareholders’ equity valuation.

Return on Equity (ROE)

The ROE data mirror the profitability trends closely, showing robust positive returns in 2014 at about 21.5%. This performance deteriorated sharply in the following years, dropping into negative territory with a pronounced low of around -61% in 2016, which corresponds to the large loss recorded that year. Slight improvements are noticed in 2017 but remain negative. By 2018, ROE returns to a positive level near 17%, aligning with restored profitability. Adjusted ROE values closely track the reported figures, again indicating that inventory adjustments have a negligible effect on overall equity returns.

Overall Insights

The data reflect a period of significant financial distress and recovery within the five-year span. The severe losses and declining equity from 2015 to 2017 are indicative of operational challenges or adverse market conditions. The marginal differences between reported and adjusted figures throughout suggest that inventory accounting under LIFO does not materially alter the financial condition or performance indicators. The positive turnaround in 2018 signals a restoration of financial health and improvement in company profitability and asset base strength.

Net Income Trends

The reported net income attributable to the company exhibited significant volatility over the analyzed period. In 2014, the company reported a strong positive net income of 3,500 million US dollars. However, this figure turned negative in 2015 and 2016, with losses of 671 million and 5,763 million US dollars respectively. A partial recovery occurred in 2017, with a reduced loss of 463 million US dollars, followed by a return to profitability in 2018 with net income of 1,656 million US dollars. The inventory LIFO reserve adjusted net income showed a similar pattern, differing only marginally from the reported figures, indicating that the inventory adjustments had minimal impact on the net income figures.

Total Assets

Total assets demonstrated a decreasing trend from 2015 through 2018. Reported total assets increased from 32,240 million US dollars in 2014 to 36,942 million US dollars in 2015, then declined sharply to 27,000 million US dollars in 2016, continuing a downward trend to 25,085 million in 2017 and 25,982 million in 2018. Adjusted total assets follow a similar pattern, showing only slight variations compared to reported figures, indicating that inventory LIFO reserves had a limited effect on total asset valuation.

Return on Assets (ROA)

The reported ROA values range from positive to negative over the period. The highest ROA was observed in 2014 at 10.86%, followed by a dramatic drop to negative 1.82% in 2015, and a further decline to negative 21.34% in 2016. In 2017, ROA remained slightly negative at -1.85%, then recovered to 6.37% in 2018. Adjusted ROA closely mirrors the reported ROA, with minimal differences, confirming that inventory reserve adjustments did not significantly alter the company’s asset profitability profile.

General Insights

The data reveals a challenging period for the company between 2015 and 2017, marked by substantial losses and declining asset base and profitability. The recovery in 2018, evidenced by positive net income and ROA resurgence, suggests an improvement in operational or market conditions. The adjustments for inventory LIFO reserve do not materially change financial outcomes or trends, indicating that the reserve had a limited impact on performance measurement during these years.