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).
An evaluation of liquidity ratios from 2014 to 2018 reveals a period of significant volatility centered around a peak in 2015, followed by a gradual normalization. While all three liquidity metrics surged in 2015, the subsequent years demonstrate a consistent decline, though ratios remained at levels that suggest a sustained ability to meet short-term obligations.
- Current Ratio
- The current ratio rose from 2.56 in 2014 to a peak of 4.03 in 2015. This was followed by a downward trend, decreasing to 2.90 in 2016 and reaching a low of 2.22 in 2017, before stabilizing slightly at 2.32 in 2018. The ratio remained well above 2.0 throughout the period, indicating a strong buffer of current assets relative to current liabilities.
- Quick Ratio
- A trajectory similar to the current ratio is observed in the quick ratio, which increased from 1.68 in 2014 to 2.87 in 2015. A subsequent contraction brought the ratio down to 1.97 in 2016 and further to 1.51 by 2018. The fact that the quick ratio consistently remained above 1.0 indicates that immediate liabilities could be covered without relying on the sale of inventories.
- Cash Ratio
- The most significant fluctuation occurred in the cash ratio, which climbed sharply from 0.39 in 2014 to 1.88 in 2015. This metric experienced the most aggressive decline over the following three years, falling to 1.00 in 2016 and ending at 0.42 in 2018. This pattern reflects a temporary and substantial increase in cash holdings in 2015, which was later reduced, returning the cash position to levels similar to those seen at the start of the analysis period.
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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 | ||||||
| SLB N.V. | — | — | — | — | — | |
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.
An analysis of the liquidity position from 2014 to 2018 reveals significant volatility in short-term asset management, although the company maintained a strong capacity to cover its short-term obligations throughout the observed period.
- Current Ratio Trajectory
- The current ratio experienced a sharp increase from 2.56 in 2014 to a peak of 4.03 in 2015. This was followed by a downward trend through 2017, where it reached 2.22, before stabilizing slightly at 2.32 in 2018. Despite these fluctuations, the ratio remained consistently above 2.0, indicating a robust margin of safety for meeting current liabilities.
- Current Asset Dynamics
- Current assets showed substantial variance, peaking at 21,609 million US dollars in 2015 before decreasing sharply to 11,677 million US dollars in 2016. The subsequent years saw relative stability, with assets remaining between 10,777 million and 11,151 million US dollars. The spike in 2015 was the primary driver for the corresponding peak in the current ratio.
- Current Liability Trends
- Current liabilities exhibited a general decline from 5,883 million US dollars in 2014 to a minimum of 4,023 million US dollars in 2016. A moderate increase followed in 2017, with the balance settling at 4,802 million US dollars by 2018. The relative stability of these liabilities compared to the volatility of assets suggests that liquidity shifts were primarily influenced by changes in asset composition rather than short-term debt accumulation.
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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 | ||||||
| SLB N.V. | — | — | — | — | — | |
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.
The liquidity position of Halliburton Co. between 2014 and 2018 is characterized by a significant peak in short-term liquidity in 2015, followed by a period of normalization and a gradual decline toward the end of the analyzed timeframe.
- Total Quick Assets
- Quick assets exhibited substantial volatility, increasing from US$ 9,855 million in 2014 to a peak of US$ 15,394 million in 2015. This surge was followed by a sharp reduction in 2016 to US$ 7,931 million, with a subsequent gradual downward trajectory ending at US$ 7,242 million by December 31, 2018.
- Current Liabilities
- Current liabilities showed a general downward trend from 2014 to 2016, decreasing from US$ 5,883 million to a low of US$ 4,023 million. However, this trend reversed in 2017 as liabilities increased to US$ 4,862 million, remaining relatively stable at US$ 4,802 million by the end of 2018.
- Quick Ratio Performance
- The quick ratio reached a maximum of 2.87 in 2015, resulting from the simultaneous expansion of quick assets and the contraction of current liabilities. Following this peak, the ratio declined to 1.97 in 2016 and continued to decrease, settling at 1.51 by December 31, 2018. Despite this downward trend after 2015, the ratio remained consistently above 1.0 throughout the period, suggesting a sustained capacity to cover immediate liabilities with liquid assets.
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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 | ||||||
| SLB N.V. | — | — | — | — | — | |
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.
The liquidity position from 2014 to 2018 is characterized by significant volatility in cash reserves, which resulted in substantial fluctuations in the company's immediate ability to cover short-term obligations.
- Total Cash Assets Trend
- A sharp increase in cash holdings occurred in 2015, with total cash assets rising to 10,077 million US dollars from 2,291 million US dollars in 2014. This peak was followed by a consistent three-year decline, with assets falling to 4,009 million US dollars in 2016, 2,337 million US dollars in 2017, and ending at 2,008 million US dollars in 2018.
- Current Liabilities Movement
- Current liabilities exhibited relative stability compared to cash assets. Obligations decreased from 5,883 million US dollars in 2014 to a period low of 4,023 million US dollars in 2016, before stabilizing between 4,802 million and 4,862 million US dollars during 2017 and 2018.
- Cash Ratio Analysis
- The cash ratio shifted dramatically from 0.39 in 2014 to a peak of 1.88 in 2015, indicating a period of exceptionally high liquidity where cash assets far exceeded current liabilities. This trend reversed immediately thereafter, with the ratio declining to 1.00 in 2016, 0.48 in 2017, and 0.42 in 2018. By the end of the analyzed period, the liquidity position had returned to levels nearly identical to those observed in 2014.
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