Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
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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- Income Statement
- Statement of Comprehensive Income
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2005
- Analysis of Revenues
- Analysis of Debt
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Short-term Activity Ratios (Summary)
National Oilwell Varco Inc., short-term (operating) activity 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).
The financial data reveals several noteworthy trends in the operational efficiency and liquidity management over the observed periods.
- Inventory Turnover
- The inventory turnover ratio exhibited an overall declining trend from 2012 into mid-2016. After peaking at 3.16 in mid-2014, the ratio steadily decreased to 2.01 by mid-2016, indicating a slower rate of inventory movement and potentially increased inventory holding.
- Receivables Turnover
- The receivables turnover ratio fluctuated moderately, with notable improvements around 2015 when it peaked close to 5.76, suggesting enhanced effectiveness in collecting receivables during that period. However, the latter data points show some volatility, ending with a modest decline by mid-2016.
- Payables Turnover
- There was a clear upward trend in payables turnover, rising from approximately 10.93 in early 2012 to above 21 by mid-2016. This reflects a stronger emphasis on faster payment to suppliers or possibly stronger negotiation power improving payment terms over time.
- Working Capital Turnover
- Working capital turnover ratios demonstrated some variability but generally trended downward, decreasing from early 2012 levels around 2.14 to about 1.59 in mid-2016. This may indicate reduced efficiency in generating sales from working capital or changes in operational investment structure.
- Average Inventory Processing Period
- There was a significant decrease in average inventory processing days from 150 days in early 2012 to a low near 116 days in mid-2014, indicating faster inventory turnover during that interval. However, from late 2014 onwards, the period increased progressively, reaching 181 days by mid-2016, implying slower inventory movement and potentially higher stock levels.
- Average Receivable Collection Period
- This metric improved (declined) substantially from around 77-83 days in 2012 to a low of approximately 63 days in mid-2015, highlighting enhanced collections efficiency. Yet, there was a slight reversal afterward, settling around 75 days by mid-2016.
- Operating Cycle
- The operating cycle shortened considerably from roughly 250 days in mid-2012 to about 189 days in mid-2014, showing improved operating efficiency. Nonetheless, from 2014 forward, it lengthened again, reaching 256 days by mid-2016, signifying a slowdown in the overall cash-to-cash cycle.
- Average Payables Payment Period
- This period consistently decreased from 38 days in mid-2012 to approximately 17-18 days by mid-2016, indicating faster payments to suppliers or tightened payment terms.
- Cash Conversion Cycle
- The cash conversion cycle mirrored the operating cycle's pattern, declining from 212 days in mid-2012 to 163 days in mid-2014, then gradually rising to a peak of 238 days by mid-2016. This suggests that cash was tied up longer in operations and receivables after 2014, potentially stressing liquidity.
Overall, the data reflects initial improvements in operational efficiency and working capital management through 2014, followed by a gradual decline in efficiency metrics and elongation of cash cycles from 2015 onward. The increasing inventory days and cash conversion period may indicate challenges in inventory management and collections in recent periods, despite faster payments to suppliers.
Turnover Ratios
Average No. Days
Inventory Turnover
National Oilwell Varco Inc., inventory turnover 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) | ||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||
| Inventories, net | ||||||||||||||||||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Inventory turnover1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Inventory Turnover, 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
Inventory turnover
= (Cost of revenueQ2 2016
+ Cost of revenueQ1 2016
+ Cost of revenueQ4 2015
+ Cost of revenueQ3 2015)
÷ Inventories, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue showed a general increasing trend from March 2012 through December 2013, rising from approximately 3,036 million USD to 4,675 million USD. Following this peak, there was a noticeable decline in subsequent quarters, dropping steadily from early 2014 through mid-2016. By June 2016, the cost of revenue decreased to 1,689 million USD, reflecting a significant reduction compared to the earlier periods.
- Inventories, Net
- Net inventories initially increased from 4,528 million USD in March 2012 to a peak of 6,135 million USD in March 2013. Thereafter, inventories experienced some fluctuations but generally trended downward, particularly from late 2013 onwards. By June 2016, inventories had decreased to 4,287 million USD, indicating a moderate reduction over the observed period.
- Inventory Turnover Ratio
- The inventory turnover ratio exhibited fluctuations but generally improved from 2.44 in March 2012 to a high of 3.1 in December 2013. This suggests improved efficiency in managing inventory during this period. However, after peaking, the ratio began to decline steadily, ending near 2.01 by June 2016. The decline towards the end of the period indicates reduced efficiency in inventory utilization relative to earlier years.
- Summary of Trends
- The data indicates a period of growth in operational scale and associated costs up to the end of 2013, followed by a contraction phase. Both the cost of revenue and net inventories peaked around this time before decreasing significantly. Correspondingly, inventory management efficiency improved during the growth phase and deteriorated in the downswing. These patterns may reflect changes in market conditions, operational scaling, or strategic adjustments in inventory and cost management practices over the examined quarters.
Receivables Turnover
National Oilwell Varco Inc., receivables turnover 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) | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Receivables, net | ||||||||||||||||||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Receivables turnover1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Receivables Turnover, 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
Receivables turnover
= (RevenueQ2 2016
+ RevenueQ1 2016
+ RevenueQ4 2015
+ RevenueQ3 2015)
÷ Receivables, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The quarterly financial data reveals a fluctuating yet overall declining trend in revenue over the analyzed periods. Revenue peaked during the fourth quarter of 2013 at 6,172 million US dollars, followed by a consistent downturn through to the second quarter of 2016, where it registered the lowest value of 1,724 million US dollars. This indicates a significant contraction in sales or operational income within the span of approximately two and a half years.
Receivables, net, demonstrate a somewhat inconsistent pattern with an initial gradual increase, reaching a peak in the first quarter of 2014 at 5,310 million US dollars. Subsequent values fluctuate but have generally declined from this peak to 2,044 million US dollars by the second quarter of 2016. The early increase in receivables alongside rising revenue aligns with growth phases, while the later decline in receivables corresponds with the fall in revenue, potentially reflecting tighter credit policies or collection efforts amid decreasing sales.
The receivables turnover ratio, reflecting how effectively the company collects its receivables, shows moderate stability with some oscillations. Early values range between approximately 4.4 and 4.9, suggesting consistent collection periods. Notably, turnover ratios improved in periods coinciding with revenue decline, peaking around 5.76 in the second quarter of 2015, before slightly tapering again. This increase in turnover ratio during times of revenue decline suggests enhanced efficiency in receivables collection or a possible shift in credit terms to maintain cash flow.
- Revenue Overview
- Peaked at 6,172 million US dollars in Q4 2013, followed by a steady decline to 1,724 million US dollars by Q2 2016.
- Receivables Trend
- Increased initially, peaking at 5,310 million US dollars in Q1 2014, and then gradually decreased to 2,044 million US dollars by Q2 2016.
- Receivables Turnover Ratio
- Displayed relative stability with values mostly between 4.4 and 5.8. Improved turnover ratios were observed during periods of declining revenue, indicating more efficient receivables management.
In summary, the data suggests a challenging financial environment with declining revenue and corresponding contraction in receivables. However, the company appears to have enhanced its efficiency in receivables collection during periods of revenue decline, which may have mitigated liquidity risks. The downward revenue trend warrants further investigation to determine underlying causes and to assess sustainability and operational resilience.
Payables Turnover
National Oilwell Varco Inc., payables turnover calculation (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).
1 Q2 2016 Calculation
Payables turnover
= (Cost of revenueQ2 2016
+ Cost of revenueQ1 2016
+ Cost of revenueQ4 2015
+ Cost of revenueQ3 2015)
÷ Accounts payable
= ( + + + )
÷ =
The financial data reveals several notable trends regarding cost of revenue, accounts payable, and payables turnover over the examined periods.
- Cost of Revenue
- The cost of revenue initially showed an upward trend from early 2012, rising from approximately 3,036 million to a peak near 4,675 million in late 2013. Following this peak, there was a consistent decline through 2014 and 2015, with costs dropping sharply to below 2,000 million by mid-2016. This pattern suggests a significant reduction in production or procurement expenses, possibly reflecting decreased sales, improved operational efficiencies, or changes in pricing and supply chain management.
- Accounts Payable
- Accounts payable followed a pattern somewhat aligned with the cost of revenue, increasing from 1,009 million in early 2012 up to a high point of around 1,391 million in early 2014. Subsequently, payables steadily declined, reaching approximately 434 million by mid-2016. The reduction in payables aligns with reduced cost of revenue, indicating a possible tightening in payment cycles or lower purchasing volumes.
- Payables Turnover Ratio
- The payables turnover ratio exhibited a rising trend throughout the periods. Starting around 10.93 in early 2012, it increased consistently, reaching values above 18 by late 2015, and peaking at about 21.4 in early 2016. This increase in turnover ratio indicates the company is paying its suppliers more frequently or rapidly over time. Despite a slight dip in mid-2016, the overall trend suggests improved efficiency in managing payables or changes in credit terms with suppliers.
In summary, the data reflects a company that is experiencing a decline in cost of revenue and accounts payable in recent periods, potentially due to operational contraction or cost-cutting measures. Concurrently, the increasing payables turnover ratio suggests an acceleration in payment processes, which could reflect strategic changes in working capital management or supplier relationships. These developments warrant close monitoring to assess impacts on liquidity and supplier trust.
Working Capital Turnover
National Oilwell Varco Inc., working capital turnover 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 | ||||||||||||||||||||||||
| Less: Current liabilities | ||||||||||||||||||||||||
| Working capital | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Working capital turnover1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Working Capital Turnover, 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
Working capital turnover
= (RevenueQ2 2016
+ RevenueQ1 2016
+ RevenueQ4 2015
+ RevenueQ3 2015)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibited fluctuations over the analyzed periods. Initially, it showed an increasing trend from 7,391 million USD to a peak of 10,029 million USD by the end of 2012. Subsequently, the working capital values generally declined with some minor fluctuations, falling to 6,257 million USD by mid-2016. This indicates a contraction in the company's available short-term assets over time.
- Revenue
- Revenue presented a growth phase until the fourth quarter of 2013, increasing from 4,303 million USD to 6,172 million USD. Following this peak, there was a significant and continuous decline across subsequent quarters, reaching a low of 1,724 million USD by June 2016. The trend highlights a marked reduction in sales or operational cash inflows during the latter half of the period.
- Working Capital Turnover Ratio
- The working capital turnover ratio, reflecting revenue relative to working capital, fluctuated moderately throughout the period. Starting at 2.14 in early 2012, it showed a mixed pattern with peaks above 2.4 around 2014 and early 2015. However, the ratio progressively decreased from late 2015 onward, reaching 1.59 by mid-2016. This decline suggests reduced efficiency in generating revenue from available working capital in the more recent periods.
- Overall Analysis
- A comparative assessment of the working capital and revenue reveals that while working capital decreased gradually from its peak in 2012, revenue experienced a sharper and more pronounced decline starting in late 2013. The diminishing working capital turnover ratio in later periods indicates decreasing operational efficiency in converting working capital into sales. This could reflect challenges in market demand, pricing pressures, or operational constraints affecting the financial performance.
Average Inventory Processing Period
National Oilwell Varco Inc., average inventory processing period 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 | ||||||||||||||||||||||||
| Inventory turnover | ||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||
| Average inventory processing period1 | ||||||||||||||||||||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||
| Average Inventory Processing Period, 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
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The financial data indicates a notable trend in inventory management efficiency over the examined periods. The inventory turnover ratio demonstrates an overall fluctuation with periods of both improvement and decline.
- Inventory Turnover Ratio
- The ratio starts at 2.44 in the first quarter of 2012 and experiences a decline reaching a low point of 2.19 by mid-2012. Subsequently, there is a steady increase throughout 2013, peaking at 3.1 by the end of that year. This suggests enhanced efficiency in inventory management during this period. The ratio maintains values close to 3.0 in early to mid-2014 but begins to decline gradually thereafter. By mid-2016, the ratio falls to 2.01, indicating a deterioration in the frequency at which inventory is sold and replaced.
- Average Inventory Processing Period
- This period, expressed in days, inversely correlates with the inventory turnover ratio. Initially, it records 150 days in early 2012 and increases to 167 days by mid-2012, reflecting slower inventory movement. A consistent improvement is seen in 2013, with the period decreasing to 118 days by year-end, in alignment with higher turnover ratios. In 2014, the period remains relatively stable around 120 days, but from early 2015 onward, a gradual increase is observed. The processing period extends notably in 2016, reaching 181 days by mid-year, corroborating the decline in inventory turnover and suggesting lengthier inventory holding times.
In summary, the data points to a period of improved inventory efficiency during 2013, followed by a material decline beginning in 2015 continuing through mid-2016. This trend may reflect changes in operational effectiveness, demand fluctuations, or inventory management policies impacting the company's ability to convert inventory into sales promptly.
Average Receivable Collection Period
National Oilwell Varco Inc., average receivable collection period 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 | ||||||||||||||||||||||||
| Receivables turnover | ||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||
| Average receivable collection period1 | ||||||||||||||||||||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||
| Average Receivable Collection Period, 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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover Ratio
- The receivables turnover ratio exhibits fluctuations throughout the periods analyzed. Starting at 4.75 in March 2012, it experienced a slight decline reaching 4.41 in June 2012, followed by moderate increases and decreases within a narrow range until the end of 2013. During 2014, the ratio generally improved, peaking at 5.31 in March 2015 and reaching its highest point of 5.76 in June 2015. After this peak, the ratio showed a declining trend toward mid-2016, falling to 4.86 by June 2016. Overall, despite short-term volatility, the receivables turnover ratio demonstrated an upward trend from early 2012 through mid-2015, indicating improved efficiency in collecting receivables, before somewhat weakening in 2016.
- Average Receivable Collection Period
- The average receivable collection period shows an inverse relationship with the receivables turnover ratio, as expected. Initially, the collection period was 77 days in March 2012 and increased to 86 days by March 2014, indicating a deterioration in collection efficiency. However, from this peak, the period steadily shortened, reaching its lowest point of 63 days in June 2015, signifying enhanced collection efficiency. Following this improvement, the collection period gradually lengthened again to 75 days by June 2016. These variations correspond closely to the movements observed in the receivables turnover ratio, reflecting cyclical changes in collection practices or customer payment behaviors over time.
- Summary and Insights
- The trends in both metrics suggest that the company experienced periods of both strengthening and weakening in its ability to manage receivables. The peak efficiency in mid-2015, as indicated by both a high receivables turnover ratio and a low average collection period, implies successful credit management and prompt collections during that time. Conversely, the decline in turnover ratio and increase in collection period by mid-2016 may reveal emerging challenges in receivables management or changing market conditions affecting customer payment patterns. While the overall trend over the roughly four-year span is an improvement compared to the earliest data points, the recent downturn signals a need to monitor receivables closely and possibly adjust credit policies or collection efforts to maintain financial health.
Operating Cycle
National Oilwell Varco Inc., operating cycle calculation (quarterly data)
No. days
| 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 | ||||||||||||||||||||||||
| Average inventory processing period | ||||||||||||||||||||||||
| Average receivable collection period | ||||||||||||||||||||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Operating cycle1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Operating Cycle, 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
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 shows a general downward trend from March 2012 to December 2013, decreasing from 150 days to 118 days, indicating an improvement in inventory management efficiency during this period. However, starting in 2014, the period stabilizes around the low 120-day range before gradually increasing again from 2015 through mid-2016, reaching 181 days by June 2016. This upward shift suggests a slowdown in inventory turnover in the latest periods observed.
- Average Receivable Collection Period
- The average receivable collection period exhibits moderate fluctuations but generally trends downward over the timeframe. Beginning at 77 days in March 2012, it declines with some variability to a low of 63 days in June 2015, reflecting improvements in collecting receivables. Following this trough, the collection period slightly fluctuates but remains within the 65 to 75-day range through mid-2016, suggesting maintained efficiency in receivables management despite some minor variability.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivable collection periods, mirrors the patterns observed in the two components. It increases initially from 227 days in March 2012 to a peak of 250 days in June 2012, then generally declines to 194-195 days in early 2015, indicating improving overall operational efficiency. However, from 2015 onwards, the operating cycle progressively lengthens again, reaching 256 days by June 2016. This lengthening suggests a deterioration in overall operational efficiency, largely driven by the increasing inventory processing period.
Average Payables Payment Period
National Oilwell Varco Inc., average payables payment period calculation (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).
1 Q2 2016 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
- Payables Turnover Ratio Analysis
- Over the examined periods, the payables turnover ratio showed a general upward trend. Starting at approximately 10.93 in early 2012, it experienced a slight dip mid-2012 before increasing steadily through to mid-2016. The ratio rose from around 12.24 in Q1 2013 to a peak of 21.4 in Q1 2016, followed by a minor decline in the subsequent quarter. This pattern indicates an enhancement in the company's efficiency regarding the management of its payables, suggesting quicker payments to suppliers over the years.
- Average Payables Payment Period
- The average payables payment period, measured in days, moved inversely to the payables turnover ratio throughout the timeframe. It decreased significantly from 33 days in early 2012 to a low point around 17 days by mid-2016. The reduction was gradual but consistent, with a notable sharper decline occurring after 2014. This shortening of the payment period aligns with the increasing payables turnover ratio, demonstrating a strategic shift toward faster settlement of payables.
- Correlation and Implications
- The inverse relationship between the payables turnover ratio and the average payment period is indicative of improved cash management practices. By reducing the time taken to pay its suppliers, the company may be strengthening supplier relationships or capitalizing on early payment discounts, though it may also be foregoing extended credit terms. The sustained improvement over the five-year span suggests deliberate operational changes focused on enhancing working capital efficiency.
Cash Conversion Cycle
National Oilwell Varco Inc., cash conversion cycle calculation (quarterly data)
No. days
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 conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
The analysis of the financial time periods reveals several noteworthy trends related to the company's operational efficiency and cash management over a span of fourteen quarters.
- Average Inventory Processing Period
- The average inventory processing period displayed a general decline from 150 days at the beginning of the period to a low of 118 days by the end of 2013, suggesting improvements in inventory turnover efficiency. However, from early 2014 onward, there was a gradual increase, reaching 181 days by mid-2016, indicating a slowdown in inventory turnover and potentially higher inventory levels or slower sales pace in later periods.
- Average Receivable Collection Period
- The average receivable collection period remained relatively stable with some fluctuations. Starting at 77 days, the period experienced minor variations throughout, with a general slight downward trend from late 2014 to early 2016, peaking at 86 days in early 2014 and lowest at 63 days in mid-2015. The reduction during this timeframe suggests improved efficiency in collection processes, but a subsequent slight rise towards mid-2016 indicates some variability in receivables management.
- Average Payables Payment Period
- There was a consistent decreasing trend in the average payables payment period from 33 days to 17-18 days by mid-2016. This suggests the company began paying its suppliers more quickly over time. While faster payments can improve supplier relationships, this trend also implies less utilization of credit terms which could impact cash outflows.
- Cash Conversion Cycle
- The cash conversion cycle, measuring the overall time span from outlay of cash on inventory to collection from customers, started at 194 days and showed minor improvement until late 2013 with a low of 169 days. However, from 2014 onward, it generally increased, culminating at 238 days by mid-2016. This upward trajectory indicates a lengthening of the cycle, driven mainly by the elongation of the inventory processing period and some variability in receivables and payables periods. The longer cash conversion cycle suggests an increasing strain on working capital and potential cash flow challenges.
In summary, the operational efficiency in handling inventory showed initial improvement but deteriorated in later periods. Receivables management improved mildly but with fluctuations, while payables were settled increasingly faster. The net effect, as reflected in the cash conversion cycle, points to a gradual increase in cash tied up in operations, signifying potential liquidity management concerns that may require strategic attention.