Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Halliburton Co., long-term (investment) activity ratios
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).
The analysis of long-term activity ratios between 2014 and 2018 reveals a distinct U-shaped trend characterized by a significant contraction in asset efficiency during the 2015-2016 period, followed by a consistent recovery phase through 2018.
- Net Fixed Asset Turnover
- An initial decline is observed from 2.63 in 2014 to a low of 1.86 in 2016, indicating a temporary reduction in the ability to generate revenue from fixed investments. However, a strong reversal occurred thereafter, with the ratio climbing to 2.68 by 2018, effectively restoring efficiency to levels slightly above those seen at the start of the period.
- Total Asset Turnover
- Overall asset utilization experienced a sharp decline, dropping from 1.02 in 2014 to 0.59 in 2016. While a recovery trend is evident in 2017 and 2018, reaching 0.92, the ratio remained below the 2014 baseline. This suggests that while efficiency improved, the total asset base was not utilized as intensively as it was in 2014.
- Equity Turnover
- Equity utilization followed a similar pattern of initial volatility followed by growth. After decreasing from 2.02 in 2014 to 1.53 in 2015, the ratio entered a period of sustained growth, peaking at 2.52 in 2018. This indicates a significant increase in the efficiency of generating revenue relative to the shareholders' equity invested in the company.
The convergence of these trends suggests a period of operational stress or market downturn centered around 2016, which was subsequently mitigated by improved asset management or increased revenue generation, resulting in a stronger equity utilization profile by the end of 2018.
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Net Fixed Asset Turnover
Halliburton Co., net fixed asset turnover 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) | ||||||
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Property, plant, and equipment, net of accumulated depreciation | 8,961) | 8,521) | 8,532) | 10,911) | 12,475) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 2.68 | 2.42 | 1.86 | 2.17 | 2.63 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, 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
Net fixed asset turnover = Revenue ÷ Property, plant, and equipment, net of accumulated depreciation
= 23,995 ÷ 8,961 = 2.68
2 Click competitor name to see calculations.
The net fixed asset turnover ratio exhibited a U-shaped trajectory between 2014 and 2018, reflecting a period of significant operational contraction followed by a recovery in asset utilization efficiency.
- Asset Efficiency Decline (2014–2016)
- A downward trend is observed in the net fixed asset turnover ratio, which decreased from 2.63 in 2014 to a minimum of 1.86 in 2016. This deterioration was primarily driven by a substantial reduction in revenue, which fell from US$ 32,870 million to US$ 15,887 million. While net property, plant, and equipment were reduced from US$ 12,475 million to US$ 8,532 million during this interval, the contraction in the asset base was insufficient to offset the steeper decline in revenue, leading to lower productivity per unit of fixed assets.
- Efficiency Recovery and Optimization (2017–2018)
- The ratio rebounded significantly, increasing to 2.42 in 2017 and reaching 2.68 by the end of 2018. This improvement is attributed to a strong recovery in revenue, which climbed to US$ 23,995 million by 2018. Because the net fixed asset base was maintained at a lean level—rising only slightly to US$ 8,961 million—the company achieved a higher turnover ratio in 2018 than was recorded in 2014. This suggests an optimized asset structure capable of supporting higher revenue volumes with fewer fixed investments.
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Total Asset Turnover
Halliburton Co., total asset turnover 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) | ||||||
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Total assets | 25,982) | 25,085) | 27,000) | 36,942) | 32,240) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.92 | 0.82 | 0.59 | 0.64 | 1.02 | |
| Benchmarks | ||||||
| Total Asset Turnover, 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
Total asset turnover = Revenue ÷ Total assets
= 23,995 ÷ 25,982 = 0.92
2 Click competitor name to see calculations.
The financial period between 2014 and 2018 is characterized by a significant contraction in operational efficiency followed by a steady recovery phase. The overall trajectory of asset utilization reflects a period of high volatility, with a notable trough in 2016 before a consistent upward trend in the efficiency ratio resumed through 2018.
- Revenue Dynamics
- A sharp decline in revenue is observed from 2014 to 2016, where figures dropped from 32,870 million US$ to a low of 15,887 million US$. This represents a reduction of approximately 51.6% over two years. Starting in 2017, a recovery phase began, with revenue climbing back to 23,995 million US$ by the end of 2018, although it remained below 2014 levels.
- Asset Base Evolution
- Total assets initially increased in 2015 to 36,942 million US$ despite falling revenues, which contributed to an initial decline in efficiency. Subsequently, a significant reduction in the asset base occurred between 2015 and 2017, with total assets falling to 25,085 million US$. This suggests a strategic downsizing or impairment of assets to align the cost base with reduced market demand. Assets stabilized slightly in 2018 at 25,982 million US$.
- Total Asset Turnover Analysis
- The total asset turnover ratio experienced a substantial decrease from 1.02 in 2014 to a minimum of 0.59 in 2016. This downward trend indicates a diminished capacity to generate sales from the invested asset base during the peak of the revenue decline. However, the ratio improved significantly in 2017 and 2018, reaching 0.92. This recovery is attributed to the combination of rising revenues and a leaner asset structure, signaling an improvement in overall investment efficiency and operational leverage.
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Equity Turnover
Halliburton Co., equity turnover 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) | ||||||
| Revenue | 23,995) | 20,620) | 15,887) | 23,633) | 32,870) | |
| Company shareholders’ equity | 9,522) | 8,322) | 9,409) | 15,462) | 16,267) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 2.52 | 2.48 | 1.69 | 1.53 | 2.02 | |
| Benchmarks | ||||||
| Equity Turnover, 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
Equity turnover = Revenue ÷ Company shareholders’ equity
= 23,995 ÷ 9,522 = 2.52
2 Click competitor name to see calculations.
The analysis of equity turnover between 2014 and 2018 reveals a period of significant financial volatility followed by a recovery in asset utilization efficiency. While revenue experienced a sharp contraction in the first half of the observed period, a subsequent reduction in shareholders' equity contributed to a higher equity turnover ratio by 2018.
- Revenue Performance
- A substantial decline in revenue is observed from 2014 to 2016, with values falling from 32,870 million US$ to 15,887 million US$. This downward trend reversed starting in 2017, with revenue climbing to 20,620 million US$ and reaching 23,995 million US$ by 2018, although it remained below the 2014 peak.
- Shareholders' Equity Dynamics
- Shareholders' equity underwent a marked contraction, particularly between 2015 and 2017. Equity decreased from 16,267 million US$ in 2014 to a minimum of 8,322 million US$ in 2017. A modest recovery was noted in 2018, with equity increasing to 9,522 million US$.
- Equity Turnover Trends
- The equity turnover ratio fluctuated in alignment with the volatility of revenue and equity. After an initial drop from 2.02 in 2014 to 1.53 in 2015, the ratio entered a consistent upward trajectory. The increase to 2.48 in 2017 and 2.52 in 2018 indicates that the company generated more revenue per unit of equity. This improvement in the ratio was primarily driven by the fact that revenue recovered more rapidly than the equity base was replenished, suggesting a higher efficiency in utilizing equity to generate sales during the latter part of the period.
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