Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Halliburton Co., liquidity ratios
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Current ratio | 2.32 | 2.22 | 2.90 | 4.03 | 2.56 | |
| Quick ratio | 1.51 | 1.52 | 1.97 | 2.87 | 1.68 | |
| Cash ratio | 0.42 | 0.48 | 1.00 | 1.88 | 0.39 |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Current Ratio
- The current ratio exhibited a significant increase from 2.56 in 2014 to a peak of 4.03 in 2015, indicating enhanced short-term liquidity during that period. However, after this peak, the ratio declined steadily over the next three years, reaching 2.32 by the end of 2018. Despite this decrease, the ratio remained above 2.0 throughout, suggesting the company maintained a generally strong ability to cover its current liabilities with current assets.
- Quick Ratio
- The quick ratio mirrored a similar trend to the current ratio. It rose sharply from 1.68 in 2014 to 2.87 in 2015, indicating an improved ability to meet short-term obligations without relying on inventory. Following 2015, it steadily declined each year to 1.51 by 2018, reflecting a gradual reduction in liquid assets relative to current liabilities. Although the decrease is notable, the quick ratio remained above 1.0, signifying that liquid assets were still sufficient to cover current liabilities excluding inventory.
- Cash Ratio
- The cash ratio showed the most pronounced fluctuations among the liquidity metrics. It increased significantly from 0.39 in 2014 to 1.88 in 2015, reflecting a substantial rise in cash and cash equivalents relative to current liabilities. Thereafter, the cash ratio declined sharply over the subsequent years, dropping to 1.00 in 2016, then to 0.48 in 2017, and finally to 0.42 in 2018. This downward trend indicates diminishing cash reserves compared to liabilities, returning near the initial 2014 level by the end of the period under review.
- Overall Liquidity Trends
- The liquidity ratios collectively show a pattern of marked improvement from 2014 to 2015, followed by a gradual erosion of liquidity positions through to 2018. The peak in 2015 suggests a period of strengthened financial flexibility, but the subsequent decline across all ratios may warrant further investigation into cash management, working capital efficiency, or changes in current liabilities to ensure ongoing short-term financial stability.
Current Ratio
Halliburton Co., current ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 11,151) | 10,777) | 11,677) | 21,609) | 15,068) | |
| Current liabilities | 4,802) | 4,862) | 4,023) | 5,359) | 5,883) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 2.32 | 2.22 | 2.90 | 4.03 | 2.56 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Current ratio = Current assets ÷ Current liabilities
= 11,151 ÷ 4,802 = 2.32
2 Click competitor name to see calculations.
- Current Assets
- Current assets increased significantly from 2014 to 2015, rising from 15,068 million USD to 21,609 million USD. However, from 2015 onwards, there was a sharp decline to 11,677 million USD in 2016, followed by smaller decreases in 2017 and a slight recovery in 2018, ending at 11,151 million USD. This indicates a major reduction in current asset base after 2015, stabilizing at a lower level in subsequent years.
- Current Liabilities
- Current liabilities showed a downward trend overall, decreasing from 5,883 million USD in 2014 to 4,802 million USD in 2018. The decline was not entirely consistent, with a drop from 2014 to 2016, a small rise in 2017, and a minor decrease again in 2018. The overall decrease in current liabilities suggests some improvement in short-term obligations management.
- Current Ratio
- The current ratio exhibited considerable fluctuation during the period. It peaked in 2015 at 4.03, reflecting a strong liquidity position, likely due to the surge in current assets. Subsequently, the ratio decreased steadily through 2017 to 2.22, indicating diminishing liquidity, before a slight rise to 2.32 in 2018. Despite the decline, the ratio remained above 2, suggesting that the company continued to maintain a relatively comfortable level of short-term financial stability.
Quick Ratio
Halliburton Co., quick ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | 2,008) | 2,337) | 4,009) | 10,077) | 2,291) | |
| Receivables, less allowances for bad debts | 5,234) | 5,036) | 3,922) | 5,317) | 7,564) | |
| Total quick assets | 7,242) | 7,373) | 7,931) | 15,394) | 9,855) | |
| Current liabilities | 4,802) | 4,862) | 4,023) | 5,359) | 5,883) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.51 | 1.52 | 1.97 | 2.87 | 1.68 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 7,242 ÷ 4,802 = 1.51
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets exhibited variability over the period analyzed. There was a notable increase from 9,855 million USD at the end of 2014 to a peak of 15,394 million USD in 2015. This was followed by a significant decline to 7,931 million USD in 2016, after which the values remained relatively stable around 7,300 million USD for the subsequent years.
- Current Liabilities
- Current liabilities showed a gradual decrease over the five-year span. Beginning at 5,883 million USD in 2014, liabilities declined to 5,359 million USD in 2015, and continued dropping to a low of 4,023 million USD in 2016. After this, there was a slight increase in 2017 to 4,862 million USD, followed by a marginal decrease to 4,802 million USD in 2018.
- Quick Ratio
- The quick ratio fluctuated over the period but generally remained above 1.0, indicating that the company maintained sufficient quick assets to cover its current liabilities. The ratio improved significantly from 1.68 in 2014 to a high of 2.87 in 2015. It then declined progressively to 1.97 in 2016 and further downwards to 1.52 and 1.51 in 2017 and 2018, respectively. Despite the decline in later years, the ratio stayed above 1, suggesting ongoing liquidity adequacy.
- Overall Trends and Insights
- The data reveals a peak in liquidity and quick assets in 2015, aligning with the highest quick ratio observed. From 2016 onwards, both quick assets and the quick ratio decreased substantially, reflecting a reduction in liquid resources relative to current liabilities. Current liabilities decreased significantly until 2016 but showed slight fluctuations thereafter. The decline in quick assets and quick ratio post-2015 may warrant further investigation to understand the underlying causes and their potential impact on short-term financial stability.
Cash Ratio
Halliburton Co., cash ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and equivalents | 2,008) | 2,337) | 4,009) | 10,077) | 2,291) | |
| Total cash assets | 2,008) | 2,337) | 4,009) | 10,077) | 2,291) | |
| Current liabilities | 4,802) | 4,862) | 4,023) | 5,359) | 5,883) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.42 | 0.48 | 1.00 | 1.88 | 0.39 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,008 ÷ 4,802 = 0.42
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibited significant fluctuation over the analyzed periods. A substantial increase occurred from 2,291 million US dollars in 2014 to a peak of 10,077 million in 2015. Subsequently, cash assets sharply declined to 4,009 million in 2016, followed by a continued downward trend to 2,337 million in 2017 and further to 2,008 million by the end of 2018. This pattern suggests a major accumulation of cash in 2015, possibly due to extraordinary financing or operational events, followed by a consistent reduction over the next three years.
- Current liabilities
- Current liabilities demonstrated a general decreasing trend over the period. Starting at 5,883 million US dollars in 2014, they decreased to 5,359 million in 2015, then further dropped to 4,023 million in 2016. There was a slight increase to 4,862 million in 2017 before a marginal decrease to 4,802 million in 2018. Overall, the liabilities declined from 2014 to 2018, indicating an improvement in short-term obligations or possibly more efficient management of payable accounts.
- Cash ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, reflected the fluctuations observed in cash assets. It peaked sharply at 1.88 in 2015, suggesting a strong liquidity position that year. However, the ratio declined to 1.0 in 2016, then further decreased to 0.48 in 2017, and finally to 0.42 by 2018. This downward trend indicates a deterioration in the company’s ability to cover current liabilities with cash on hand, returning to a position below 0.5 by the end of the period, which is less favorable from a liquidity perspective.