Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
National Oilwell Varco Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
- Current ratio
- The current ratio demonstrates an overall stable to improving liquidity position across the observed periods. Starting at 2.36 in March 2012, it experienced a slight decline mid-2012 but generally remained above 2.0 throughout, reaching a peak of 3.12 by June 2016. This upward trend towards the end of the period indicates a strengthening ability to cover short-term liabilities with current assets.
- Quick ratio
- The quick ratio exhibits more variability but remains relatively steady. Initially recorded at 1.23 in March 2012, it dipped to a low of 0.89 in June 2012, suggesting a reduced level of liquid assets excluding inventories. After fluctuations in subsequent quarters, it stabilized around the 1.0 to 1.2 range from 2013 onward, ending at 1.26 in June 2016. This pattern indicates consistent maintenance of liquid assets sufficient to meet immediate obligations.
- Cash ratio
- The cash ratio presents a more variable and lower liquidity measure compared to the current and quick ratios, reflecting cash and cash equivalents relative to current liabilities. Starting at 0.62 in March 2012, it declined sharply to 0.3 in mid-2012 before recovering gradually and fluctuating around 0.4 to 0.6 thereafter. The trend towards the latter periods shows an improvement to 0.56 in June 2016, pointing to a moderate increase in cash reserves relative to current liabilities.
- Overall liquidity analysis
- The company maintained strong short-term liquidity throughout the period, with all three ratios consistently suggesting an adequate ability to meet current liabilities. The rising trajectory of the current ratio and improvements in the quick and cash ratios near the end of the timeframe imply enhanced liquidity management or accumulation of liquid assets. Despite some fluctuations, the financial data suggests increasingly robust liquidity positioning up to mid-2016.
Current Ratio
National Oilwell Varco Inc., current ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Current assets | 9,204) | 10,048) | 11,801) | 12,933) | 14,167) | 15,299) | 16,162) | 16,670) | 16,003) | 17,211) | 16,423) | 16,255) | 15,221) | 14,994) | 15,678) | 13,667) | 13,014) | 12,836) | ||||||
| Current liabilities | 2,947) | 3,435) | 4,249) | 5,193) | 5,672) | 6,667) | 7,374) | 7,201) | 6,915) | 7,098) | 6,678) | 6,317) | 5,619) | 5,546) | 5,649) | 5,681) | 6,481) | 5,445) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Current ratio1 | 3.12 | 2.93 | 2.78 | 2.49 | 2.50 | 2.29 | 2.19 | 2.31 | 2.31 | 2.42 | 2.46 | 2.57 | 2.71 | 2.70 | 2.78 | 2.41 | 2.01 | 2.36 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= 9,204 ÷ 2,947 = 3.12
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's liquidity position over the observed periods.
- Current Assets
- Current assets demonstrated an overall increasing trend from March 2012 to December 2013, rising from approximately $12.8 billion to a peak of about $16.4 billion. After this peak, a gradual decline is observed, with current assets decreasing to around $9.2 billion by June 2016. This pattern suggests an initial build-up of liquid and short-term resources, followed by a systematic reduction over the subsequent two and a half years.
- Current Liabilities
- Current liabilities fluctuated within a narrower range compared to current assets. Starting near $5.4 billion in March 2012, liabilities generally increased to peak levels around $7.4 billion at the end of 2014. Post-2014, there is a significant and consistent downward trend, reaching approximately $2.9 billion by mid-2016. This decline suggests active efforts to reduce short-term obligations over the later periods.
- Current Ratio
- The current ratio, a key liquidity metric, showed moderate fluctuations throughout the timeframe. Initially, the ratio decreased from 2.36 to around 2.0 during mid-2012, indicating a slight reduction in short-term financial cushion. Subsequently, the ratio improved and remained relatively stable near the 2.4 to 2.7 range until late 2014. From 2015 onwards, a clear upward trend is observed, with the current ratio increasing steadily to above 3.1 by June 2016. This improvement reflects enhanced liquidity, driven by the combination of decreasing current liabilities and relatively maintained current assets.
In summary, the company exhibited strong liquidity management throughout the period, achieving an improved current ratio by significantly lowering current liabilities later in the timeline while maintaining a substantial level of current assets. The initial growth and subsequent drawdown in current assets alongside the long-term decrease in liabilities result in a stronger short-term financial position in the final quarters analyzed.
Quick Ratio
National Oilwell Varco Inc., quick ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 1,661) | 1,759) | 2,080) | 1,846) | 2,544) | 3,024) | 3,536) | 4,091) | 3,885) | 3,688) | 3,436) | 2,741) | 2,327) | 2,441) | 3,319) | 1,702) | 1,917) | 3,390) | ||||||
| Receivables, net | 2,044) | 2,212) | 2,926) | 3,325) | 3,476) | 4,024) | 4,416) | 4,482) | 4,427) | 5,310) | 4,896) | 4,801) | 4,424) | 4,279) | 4,320) | 4,033) | 3,860) | 3,330) | ||||||
| Total quick assets | 3,705) | 3,971) | 5,006) | 5,171) | 6,020) | 7,048) | 7,952) | 8,573) | 8,312) | 8,998) | 8,332) | 7,542) | 6,751) | 6,720) | 7,639) | 5,735) | 5,777) | 6,720) | ||||||
| Current liabilities | 2,947) | 3,435) | 4,249) | 5,193) | 5,672) | 6,667) | 7,374) | 7,201) | 6,915) | 7,098) | 6,678) | 6,317) | 5,619) | 5,546) | 5,649) | 5,681) | 6,481) | 5,445) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Quick ratio1 | 1.26 | 1.16 | 1.18 | 1.00 | 1.06 | 1.06 | 1.08 | 1.19 | 1.20 | 1.27 | 1.25 | 1.19 | 1.20 | 1.21 | 1.35 | 1.01 | 0.89 | 1.23 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 3,705 ÷ 2,947 = 1.26
2 Click competitor name to see calculations.
- Trend in Total Quick Assets
- The total quick assets exhibit notable fluctuations over the observed periods. Initially, there is a decline from 6,720 million USD at the end of March 2012 to 5,735 million USD by the end of September 2012, followed by a significant increase reaching a peak of 8,332 million USD at the end of December 2013. After this peak, a gradual decline is observed, with total quick assets dropping steadily to 3,705 million USD by June 2016.
- Trend in Current Liabilities
- Current liabilities show a somewhat inconsistent pattern but generally maintain a high level throughout the periods. Starting at 5,445 million USD in March 2012, liabilities increase and peak at 7,374 million USD by the end of December 2014. Thereafter, a consistent declining trend is present, with current liabilities decreasing to 2,947 million USD by June 2016.
- Quick Ratio Analysis
- The quick ratio indicates the company's short-term liquidity and ability to cover current liabilities with quick assets. The ratio begins above 1.0 at 1.23 in March 2012 but dips below 1.0 to 0.89 in June 2012, reflecting tighter liquidity conditions during that quarter. Subsequently, it recovers and stabilizes generally above 1.0, peaking at 1.35 during December 2012. From 2013 to mid-2014, the quick ratio fluctuates narrowly around 1.2, indicating moderate liquidity. However, a slight declining trend is observed from late 2014 through 2015, reaching a low of 1.00 in September 2015, suggesting reduced liquidity cushion. During 2016, the quick ratio improves slightly, reaching 1.26 by June 2016.
- Overall Insights
- The data reveal a period of financial strengthening through the end of 2013, where both quick assets increased and liquidity ratios were relatively robust. However, starting in 2014, total quick assets and current liabilities both begin to decline, with liabilities decreasing at a faster rate by mid-2016, improving the quick ratio to some extent. This may indicate efforts to reduce liability levels and maintain liquidity despite declining quick assets. The fluctuations in the quick ratio reflect varying liquidity positions, with a general trend toward stabilization above 1.0 in recent periods, suggesting an adequate short-term financial position.
Cash Ratio
National Oilwell Varco Inc., cash ratio calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Cash and cash equivalents | 1,661) | 1,759) | 2,080) | 1,846) | 2,544) | 3,024) | 3,536) | 4,091) | 3,885) | 3,688) | 3,436) | 2,741) | 2,327) | 2,441) | 3,319) | 1,702) | 1,917) | 3,390) | ||||||
| Total cash assets | 1,661) | 1,759) | 2,080) | 1,846) | 2,544) | 3,024) | 3,536) | 4,091) | 3,885) | 3,688) | 3,436) | 2,741) | 2,327) | 2,441) | 3,319) | 1,702) | 1,917) | 3,390) | ||||||
| Current liabilities | 2,947) | 3,435) | 4,249) | 5,193) | 5,672) | 6,667) | 7,374) | 7,201) | 6,915) | 7,098) | 6,678) | 6,317) | 5,619) | 5,546) | 5,649) | 5,681) | 6,481) | 5,445) | ||||||
| Liquidity Ratio | ||||||||||||||||||||||||
| Cash ratio1 | 0.56 | 0.51 | 0.49 | 0.36 | 0.45 | 0.45 | 0.48 | 0.57 | 0.56 | 0.52 | 0.51 | 0.43 | 0.41 | 0.44 | 0.59 | 0.30 | 0.30 | 0.62 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,661 ÷ 2,947 = 0.56
2 Click competitor name to see calculations.
- Cash Assets Trend
- The total cash assets exhibited considerable fluctuations over the examined quarters. Initially, there was a notable decline from 3,390 million US dollars at the end of March 2012 to 1,702 million US dollars by the end of September 2012. This was followed by a recovery phase, with cash assets rising to a peak above 4,000 million US dollars in the last quarter of 2014. Subsequent quarters, however, saw a progressive decline again, reaching a low point under 1,800 million US dollars as of the end of June 2016.
- Current Liabilities Trend
- Current liabilities increased steadily from 5,445 million US dollars at the start of the period to a peak around 7,374 million US dollars by the end of 2014. Thereafter, a significant reduction occurred, with liabilities dropping consistently through 2015 and into the first half of 2016, reaching approximately 2,947 million US dollars by the last quarter noted.
- Cash Ratio Analysis
- The cash ratio, which evaluates the company's ability to cover current liabilities with cash and cash equivalents, varied in correspondence with the movements in cash assets and current liabilities. Initial quarters showed a decline, reaching a minimum of 0.30, followed by recovery and stabilization in the 0.4 to 0.6 range throughout the majority of the period. A notable improvement occurred toward the end, with the ratio increasing to 0.56 by mid-2016, indicating enhanced short-term liquidity.
- Overall Financial Position Insights
- Throughout the period, the company demonstrated variable liquidity management marked by declining cash assets early on and a concurrent rise in current liabilities, creating pressure on liquidity ratios. Improvements in cash holdings paired with decreasing liabilities after 2014 positively impacted liquidity. The increasing cash ratio toward the latter quarters reflects a strengthened capacity to meet short-term obligations with readily available cash, suggesting a possible strategic focus on improving financial stability and reducing short-term financial risk.