Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Short-term Activity Ratios (Summary)
Halliburton Co., short-term (operating) 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).
- Inventory Turnover
- Inventory turnover exhibited fluctuations over the observed period. It increased from 7.71 in 2014 to a peak of 8.74 in 2015, indicating improved efficiency in managing inventory. However, this was followed by a decline to 6.6 in 2016, a partial recovery to 7.66 in 2017, and a slight decrease to 6.94 in 2018. This pattern suggests variable effectiveness in inventory management, with an overall downward trend after 2015.
- Receivables Turnover
- The receivables turnover ratio remained relatively stable, with minor fluctuations. It started at 4.35 in 2014, slightly increased to 4.44 in 2015, and then declined to 4.05 in 2016. From 2016 onwards, it showed gradual improvement, reaching 4.58 by 2018. This trend indicates a general consistency in the company's efficiency in collecting receivables, with a slight strengthening toward the end of the period.
- Payables Turnover
- Payables turnover showed a clear declining trend from 9.78 in 2014 to 6.96 in 2018. The steady decrease suggests that the company took longer to pay its suppliers over time, which may have implications for supplier relationships and cash flow management.
- Working Capital Turnover
- Working capital turnover experienced significant variability. It dropped sharply from 3.58 in 2014 to 1.45 in 2015, indicating reduced efficiency in using working capital to generate sales. Afterwards, this ratio increased progressively, reaching 3.78 in 2018, surpassing the initial 2014 level. This improvement points to a recovery and enhanced utilization of working capital towards the end of the period.
- Average Inventory Processing Period
- The average inventory processing period decreased from 47 days in 2014 to 42 days in 2015, suggesting faster inventory turnover. However, it increased to 55 days in 2016, then fluctuated slightly before settling at 53 days in 2018. This reflects a lengthening of the time inventory remains on hand compared to the beginning of the period, indicating less efficient inventory management.
- Average Receivable Collection Period
- The average receivable collection period was relatively stable but showed some variation: 84 days in 2014, a slight decrease to 82 days in 2015, an increase to 90 days by 2016, and then a gradual decline to 80 days in 2018. This suggests some inconsistency in collections, but an overall tendency toward improved receivables management by the end of the period.
- Operating Cycle
- The operating cycle exhibited moderate fluctuations. It decreased from 131 days in 2014 to 124 days in 2015, then rose substantially to 145 days in 2016. Subsequently, it shortened to 133 days by 2018. Fluctuations in inventory and receivables periods primarily influenced these changes, indicating variable efficiency in the overall operating process.
- Average Payables Payment Period
- The average payables payment period lengthened continuously across the period, moving from 37 days in 2014 to 52 days in 2018. This reflects extended times in settling obligations with suppliers, consistent with the downward trend in payables turnover noted earlier.
- Cash Conversion Cycle
- The cash conversion cycle showed a general improvement, declining from 94 days in 2014 to 81 days in 2018. Despite variability—rising to 102 days in 2016 and dropping thereafter—the overall shortening of this cycle indicates enhanced efficiency in converting investments in inventory and receivables into cash.
Turnover Ratios
Average No. Days
Inventory Turnover
Halliburton Co., inventory 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) | ||||||
| Cost of services and product sales | ||||||
| Inventories | ||||||
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | ||||||
| Benchmarks | ||||||
| Inventory Turnover, 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
Inventory turnover = Cost of services and product sales ÷ Inventories
= ÷ =
2 Click competitor name to see calculations.
- Cost of services and product sales
-
The cost of services and product sales demonstrates a clear declining trend from 2014 to 2016, decreasing from 27,530 million US dollars to 15,023 million US dollars. This represents a significant reduction over this period. However, starting in 2017, the cost figures show a reversal and begin to increase again, rising to 18,355 million in 2017 and further to 21,009 million in 2018. Although this is an upward movement, the 2018 cost level remains below that observed in 2014 and 2015.
- Inventories
-
Inventory levels have generally decreased from 2014 to 2016, falling from 3,571 million US dollars to 2,275 million US dollars. This decline aligns with the reduction in cost of sales during the same period. From 2017 onward, inventories begin to increase again, with values of 2,396 million in 2017 and 3,028 million in 2018. Despite this increase, inventories in 2018 remain slightly below the 2014 benchmark but show a recovery trend after the previous lows.
- Inventory turnover
-
Inventory turnover presents more variability over the years. It attained its highest value in 2015 at 8.74, indicating efficient management or faster movement of inventory during that year. Following this peak, turnover decreased significantly to 6.6 in 2016, suggesting either an accumulation of inventory or slower sales. The ratio recovered to 7.66 in 2017 before declining again slightly to 6.94 in 2018. These fluctuations mirror changes in inventory levels and costs, reflecting varying operational dynamics and inventory management effectiveness within the company across the observed period.
Receivables Turnover
Halliburton Co., receivables 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 | ||||||
| Receivables, less allowances for bad debts | ||||||
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | ||||||
| Benchmarks | ||||||
| Receivables Turnover, 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
Receivables turnover = Revenue ÷ Receivables, less allowances for bad debts
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue exhibited a significant decline from 2014 to 2016, decreasing from 32,870 million USD in 2014 to 15,887 million USD in 2016. This represents a reduction of approximately 52%. Following this sharp decrease, revenue showed a recovery trend with increases in 2017 and 2018, reaching 23,995 million USD by the end of 2018. Despite the recovery, the revenue in 2018 remained below the 2014 level.
- Receivables, net of Allowances for Bad Debts
- Net receivables followed a pattern similar to revenue, declining from 7,564 million USD in 2014 to a low of 3,922 million USD in 2016. Subsequently, net receivables increased to 5,234 million USD in 2018. This indicates a contraction in receivables parallel to revenue reduction, followed by a moderate recovery.
- Receivables Turnover Ratio
- The receivables turnover ratio fluctuated modestly over the period. It started at 4.35 in 2014, increased slightly to 4.44 in 2015, then dipped to 4.05 in 2016, which coincides with the lowest revenue and receivables levels. The ratio improved gradually to 4.09 in 2017 and further to 4.58 in 2018. The increase in turnover ratio in 2018 indicates improved effectiveness in collecting receivables relative to sales during the recovery phase.
- Overall Analysis
- Throughout the five-year period, the company experienced significant volatility in revenue and receivables, with a pronounced decline in 2015 and 2016 and a partial recovery thereafter. The receivables turnover ratio showed resilience and improvement towards the end of the period, suggesting better management of credit and collection processes despite revenue fluctuations. The alignment between changes in net receivables and revenue suggests a consistent credit policy relative to sales volume.
Payables Turnover
Halliburton Co., payables 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) | ||||||
| Cost of services and product sales | ||||||
| Accounts payable | ||||||
| Short-term Activity Ratio | ||||||
| Payables turnover1 | ||||||
| Benchmarks | ||||||
| Payables Turnover, 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
Payables turnover = Cost of services and product sales ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
- Cost of Services and Product Sales
- The cost of services and product sales demonstrates a significant decline from 2014 through 2016, dropping from 27,530 million USD in 2014 to 15,023 million USD in 2016. Following this reduction, there is a rebound observed in 2017 and 2018 with costs increasing to 18,355 million USD and then to 21,009 million USD respectively. This pattern suggests initial cost-cutting or reduced sales activity, followed by a recovery phase.
- Accounts Payable
- Accounts payable decreases markedly between 2014 and 2016, falling from 2,814 million USD to 1,764 million USD. After 2016, it registers an upward trend, rising to 3,018 million USD by the end of 2018. This trend reflects changes in the company’s short-term obligations and possibly its purchasing or payment policies, with a reduction period succeeded by an increasing obligation phase.
- Payables Turnover Ratio
- The payables turnover ratio declines consistently over the five-year period, starting at 9.78 in 2014 and dropping to 6.96 by 2018. This reduction indicates that the company is taking longer to pay its suppliers over time, possibly reflecting changes in liquidity management, payment terms negotiation, or cash flow strategy.
Working Capital Turnover
Halliburton Co., working capital 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) | ||||||
| Current assets | ||||||
| Less: Current liabilities | ||||||
| Working capital | ||||||
| Revenue | ||||||
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | ||||||
| Benchmarks | ||||||
| Working Capital Turnover, 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
Working capital turnover = Revenue ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital figures display significant fluctuations over the five-year period. Starting at 9,185 million USD at the end of 2014, it peaked considerably in 2015 at 16,250 million USD, followed by a sharp decline in 2016 to 7,654 million USD. The downward trend continued more moderately in 2017 and 2018, with values of 5,915 million USD and 6,349 million USD respectively, indicating a reduction in the company's short-term liquidity over time after the 2015 high.
- Revenue
- Revenue demonstrates a generally declining trend from 2014 to 2016, starting at 32,870 million USD and falling to a low of 15,887 million USD in 2016. Subsequently, revenue increased to 20,620 million USD in 2017 and further to 23,995 million USD in 2018. This pattern shows a significant dip followed by recovery, but revenue in 2018 remains below the initial 2014 level.
- Working Capital Turnover
- The working capital turnover ratio varies correspondingly with the changes in working capital and revenue. It began at 3.58 in 2014, then dropped sharply to 1.45 in 2015, which correlates with the spike in working capital and decreased revenue in that year. The ratio improved to 2.08 in 2016 and surged again in 2017 to 3.49, reaching 3.78 in 2018, slightly above the initial level. This suggests enhanced efficiency in using working capital to generate revenue after the declines seen in 2015 and 2016.
- Overall Analysis
- The data reflect volatility in both liquidity and operational efficiency across the analyzed years. The substantial increase in working capital in 2015 amidst falling revenue indicates potential inventory buildup or receivables growth not matched by sales. The subsequent reductions in working capital alongside recovering revenue reflect improved resource management. The resurgence in the working capital turnover ratio towards and above the initial level further supports the view that the company regained better control over its working capital to support its revenue generation activities by 2018.
Average Inventory Processing Period
Halliburton Co., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, 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
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibited fluctuations over the analyzed period. It increased from 7.71 in 2014 to a peak of 8.74 in 2015, indicating improved efficiency in managing inventory during that year. However, in 2016, the ratio declined significantly to 6.6, suggesting a slower rate of inventory turnover. There was a partial recovery in 2017 with the ratio rising to 7.66, followed by a decrease again to 6.94 in 2018. Overall, the trend reflects variability in how effectively inventory was converted into sales or usage.
- Average Inventory Processing Period
- The average inventory processing period, measured in days, showed an inverse pattern compared to inventory turnover, which is consistent as both metrics are related. After a reduction from 47 days in 2014 to 42 days in 2015, the processing period extended markedly to 55 days in 2016, aligning with the decline in inventory turnover. In 2017, the period shortened to 48 days but then lengthened again to 53 days in 2018. This indicates intermittent changes in the speed at which inventory was processed, with slower periods in 2016 and 2018.
Average Receivable Collection Period
Halliburton Co., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, 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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio showed a slight increase from 4.35 in 2014 to 4.44 in 2015, indicating a modest improvement in the efficiency of collecting receivables. However, this ratio declined to 4.05 in 2016 and remained relatively stable at 4.09 in 2017. In 2018, the ratio increased notably to 4.58, suggesting a significant enhancement in the company's ability to collect its receivables during that year.
- Average Receivable Collection Period
- The average collection period decreased from 84 days in 2014 to 82 days in 2015, reflecting a slightly faster collection process. This metric then worsened, increasing to 90 days in 2016 and slightly improving to 89 days in 2017. A more pronounced improvement was observed in 2018, when the average collection period shortened to 80 days, indicating more efficient receivables management and faster cash inflow.
- Overall Analysis
- The data reveal some fluctuations in the efficiency of receivables management over the five-year period. After a brief improvement in 2015, the company experienced a deterioration in collection efficiency during 2016 and 2017, reflected by a lower receivables turnover and longer collection periods. The trend reversed positively in 2018, with improvement in both metrics signifying enhanced credit and collection policies or improved customer payment behavior. The 2018 performance suggests stronger cash flow implications related to receivables collection compared to prior years.
Operating Cycle
Halliburton Co., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | ||||||
| Average receivable collection period | ||||||
| Short-term Activity Ratio | ||||||
| Operating cycle1 | ||||||
| Benchmarks | ||||||
| Operating Cycle, 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
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Average inventory processing period
- The average inventory processing period exhibited fluctuations over the analyzed five-year period. Starting at 47 days in 2014, it decreased to 42 days in 2015, indicating improved inventory turnover efficiency. However, the period increased sharply to 55 days in 2016, then slightly decreased to 48 days in 2017, before rising again to 53 days in 2018. These variations suggest some inconsistency in managing inventory processing times during the period.
- Average receivable collection period
- The average receivable collection period remained relatively stable with minor fluctuations. It slightly decreased from 84 days in 2014 to 82 days in 2015, then increased to a peak of 90 days in 2016. It maintained a similar level at 89 days in 2017, followed by a reduction to 80 days in 2018. This trend indicates a general pattern of maintaining collections within a similar timeframe, with some improvement noted in 2018.
- Operating cycle
- The operating cycle, which combines inventory processing and receivable collection periods, showed variability but an overall slight increase from 131 days in 2014 to 133 days in 2018. Notably, the cycle decreased from 131 days in 2014 to 124 days in 2015, suggesting improved overall operating efficiency. However, it then lengthened to 145 days in 2016, followed by a gradual decrease to 137 days in 2017 and 133 days in 2018. The data indicates a peak in the operating cycle in 2016 with subsequent efforts to reduce it, though it remained slightly longer than the initial 2014 period.
Average Payables Payment Period
Halliburton Co., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, 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
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibited a downward trend over the analyzed period. Beginning at 9.78 in 2014, it increased slightly to 10.46 in 2015 but then declined consistently to 8.52 in 2016, 7.19 in 2017, and further to 6.96 by the end of 2018. This trend suggests a decreasing frequency of supplier payments relative to the cost of goods purchased or services received over time.
- Average Payables Payment Period
- The average payables payment period, representing how long the company takes to pay its suppliers, increased steadily from 37 days in 2014 to 52 days in 2018. After a slight reduction from 37 days in 2014 to 35 days in 2015, the payment period extended significantly to 43 days in 2016 and continued lengthening to 51 days in 2017, reaching 52 days by 2018. This indicates that the company has been gradually extending the time taken to settle payables over the years.
- Insights
- The inverse relationship between payables turnover and average payment period is evident and consistent with operational practices that extend creditor payment terms. While a lower payables turnover indicates slower payment frequency, the increase in the payment period confirms lengthening payment durations. This pattern could reflect strategic cash flow management, supplier negotiation dynamics, or changing credit terms. Careful monitoring is advisable, as extended payment periods can affect supplier relationships and potentially impact creditworthiness.
Cash Conversion Cycle
Halliburton Co., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | ||||||
| Average receivable collection period | ||||||
| Average payables payment period | ||||||
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | ||||||
| Benchmarks | ||||||
| Cash Conversion Cycle, 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 conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibited some fluctuation over the observed timeframe, starting at 47 days in 2014, decreasing to 42 days in 2015, then increasing to 55 days in 2016. Subsequently, it decreased to 48 days in 2017 before rising again to 53 days in 2018. This pattern suggests variability in inventory management efficiency, with the longest processing period occurring in 2016 and slight improvements in subsequent years, though it remained above the initial levels.
- Average Receivable Collection Period
- The average receivable collection period remained relatively stable but showed modest variations. Beginning at 84 days in 2014, it slightly decreased to 82 days in 2015, increased to 90 days in 2016, and then slightly decreased to 89 days in 2017. In 2018, there was a more noticeable reduction to 80 days. Overall, the data indicate challenges in maintaining steady collection efficiency, with improvements observed in the final year of the period.
- Average Payables Payment Period
- This metric demonstrated a consistent upward trend over the period. Starting at 37 days in 2014, the payment period shortened slightly to 35 days in 2015 but then increased steadily each year to 43 days in 2016, 51 days in 2017, and 52 days in 2018. The increasing trend indicates that the company extended its payables period, potentially managing cash outflows more conservatively.
- Cash Conversion Cycle
- The cash conversion cycle showed a declining trend overall, starting at 94 days in 2014, decreasing to 89 days in 2015, rising again to 102 days in 2016, then declining to 86 days in 2017 and reaching its lowest point at 81 days in 2018. This indicates an improvement in the company's operational efficiency in converting investments in inventory and receivables back into cash, despite a temporary setback in 2016.