SLB N.V. (NYSE:SLB)

The operating activity ratios demonstrate a period of improving efficiency that peaked in late 2024, followed by a gradual regression in performance through the first three quarters of 2026. The overall trend is characterized by a tightening of the operating cycle during the first half of the observed period, which subsequently expanded, indicating a slower conversion of current assets into cash in the most recent quarters.

Inventory Management Efficiency

Inventory turnover exhibited a steady upward trajectory from 5.32 in March 2022 to a peak of 6.59 in December 2024. This improvement is mirrored in the average inventory processing period, which declined from 69 days to a low of 55 days over the same interval. However, a reversal occurred starting in 2025, with the turnover ratio declining to 5.59 and the processing period lengthening to 65 days by September 2026, suggesting a decrease in inventory throughput efficiency.

Receivables Collection Performance

Receivables turnover remained relatively stable compared to inventory metrics, fluctuating within a narrower range between 3.79 and 4.53. The most efficient collection period was recorded in December 2024 at 81 days. Following this peak, the average receivable collection period trended upward, reaching 96 days by September 2026, which indicates a slowing of cash inflows from customers.

Working Capital Utilization

Working capital turnover displayed significant volatility, with values ranging from a low of 5.75 in June 2024 to a high of 10.14 in March 2025. This volatility suggests inconsistent levels of working capital relative to the revenue generated, or periodic adjustments in the management of short-term assets and liabilities.

Total Operating Cycle

The total operating cycle, comprising both inventory processing and receivables collection, followed a U-shaped trend. The cycle contracted from 157 days in March 2022 to a minimum of 136 days in December 2024. Subsequent quarters saw the cycle expand again, returning to 161 days by September 2026. This indicates that the gains in operational liquidity achieved through 2024 were largely offset by increased processing and collection times in 2025 and 2026.

The operating activity exhibits a consistent expansion in the cost of revenue paired with a measured increase in inventory levels. From March 2022 to September 2026, the cost of revenue rose from 5,013 million to 7,883 million, reflecting a substantial increase in operational scale over the period.

Inventory and Cost Correlation

Inventories increased from 3,719 million in March 2022 to 5,517 million by September 2026. While both cost of revenue and inventory levels maintained an upward trajectory, the cost of revenue grew at a more accelerated pace during the 2023 and 2024 periods, which positively influenced the efficiency of inventory utilization.

Inventory Turnover Trend Analysis

The inventory turnover ratio demonstrated a steady improvement for the first three years of the sequence, climbing from 5.32 in March 2022 to a peak of 6.59 in December 2024. This upward trend suggests an increase in operational efficiency, indicating that inventory was cycled more rapidly to support the growing cost of revenue.

Recent Volatility and Stabilization

A contraction in the turnover ratio began in March 2025, falling to a period low of 5.36 by September 2025. This decline aligns with a significant spike in inventory levels, which reached 5,321 million in the same quarter. In the subsequent year, the ratio stabilized, fluctuating between 5.58 and 5.80 through September 2026, suggesting a normalization of inventory management relative to the expanded cost base.

The analysis of receivables turnover reveals a period of relative stability followed by a gradual decline in collection efficiency. Revenue increased from 5,962 million USD in March 2022 to 9,449 million USD by September 2026, while receivables less allowance for doubtful accounts rose from 5,713 million USD to 9,735 million USD over the same interval.

Collection Efficiency Trends

The receivables turnover ratio remained largely stable, oscillating between 3.94 and 4.24 throughout 2022 and most of 2023. A peak in operational efficiency was observed in December 2023, where the ratio reached 4.53, indicating the most rapid conversion of receivables into cash during the analyzed period.

Recent Performance Deterioration

Following the peak in late 2023, a general downward trend in the turnover ratio is evident. The ratio declined to 3.79 by September 2026, marking the lowest point in the series. This contraction suggests a lengthening of the average collection cycle, as the growth in the receivables balance began to outpace revenue growth in the latter stages of the period.

Revenue and Receivables Correlation

A strong correlation exists between the growth in revenue and the expansion of receivables. However, while revenue grew by approximately 58% from the start to the end of the period, receivables grew by approximately 70%. This disproportionate increase in the balance sheet item relative to the income statement item is the primary driver for the compression of the turnover ratio toward the end of 2026.

The financial data reveals a consistent upward trajectory in revenue, contrasting with a highly volatile working capital profile. This divergence results in a fluctuating working capital turnover ratio, suggesting periodic shifts in operating efficiency and liquidity management.

Revenue Trends

Revenue exhibits a sustained growth pattern, increasing from 5,962 million in March 2022 to a peak of 9,744 million in December 2025, before stabilizing at 9,449 million by September 2026. This represents a significant expansion of the top line over the analyzed period.

Working Capital Fluctuations

Working capital does not follow a linear trend, showing cyclical expansions and contractions. Notable peaks occurred in June 2024 and June 2026, both exceeding 6,100 million. Conversely, significant contractions are observed in March 2022 and March 2025, indicating alternating periods of increased investment in current assets or reductions in current liabilities.

Working Capital Turnover Dynamics

The turnover ratio demonstrates significant volatility, fluctuating between a low of 5.75 in June 2024 and a high of 10.14 in March 2025. The highest efficiency levels are consistently observed during quarters where working capital is minimized relative to revenue. A recurring pattern of decline in the ratio is evident during the mid-year periods (June and September), followed by recoveries toward the end of the calendar or fiscal year, suggesting a seasonal or cyclical nature to the operating cycle.

The inventory management efficiency exhibits a distinct cyclical pattern characterized by a period of sustained optimization followed by a moderate increase in processing times and eventual stabilization.

Inventory Processing Period Trends

Between March 2022 and December 2024, a consistent downward trend in the average inventory processing period is observed. The duration decreased from a peak of 70 days in June 2022 to a minimum of 55 days by the end of 2024. This progression indicates an acceleration in the movement of inventory from acquisition to sale over this three-year window.

Analysis of Performance Reversal

A reversal in efficiency is noted starting in early 2025. The processing period rose from 59 days in March 2025 to a peak of 68 days by September 2025. This spike suggests a temporary accumulation of inventory or a deceleration in sales velocity during the third quarter of 2025.

Correlation with Inventory Turnover

The inverse relationship between the inventory turnover ratio and the processing period is maintained throughout the observed timeframe. The peak efficiency achieved in December 2024, marked by the lowest processing period of 55 days, corresponds directly with the highest recorded inventory turnover ratio of 6.59. Conversely, the decline in the turnover ratio toward 5.59 by September 2026 aligns with the increase in the processing period.

Long-term Stabilization

Following the volatility observed in 2025, the average inventory processing period demonstrates a stabilization phase throughout 2026, maintaining a constant level of 65 days across the final three quarters. This suggests a return to a steady-state operating rhythm, although at a slightly lower efficiency level than the 2024 peak.

An analysis of receivables management from March 2022 through September 2026 reveals a period of general stability followed by a temporary increase in collection efficiency and a subsequent gradual deterioration in the recovery cycle.

Receivables Turnover

The turnover ratio remained relatively consistent throughout 2022 and 2023, fluctuating within a narrow band between 3.94 and 4.24. A notable upward trend occurred during 2024, reaching a peak of 4.53 by December 31, 2024. Following this peak, a downward trajectory is observed, with the ratio declining to 3.79 by September 30, 2026, marking the lowest efficiency level in the analyzed period.

Average Receivable Collection Period

The collection period exhibited moderate volatility between 86 and 93 days during the first two years of the analysis. A period of improved operational efficiency is evident in late 2024, with the collection cycle contracting to a minimum of 81 days by December 31, 2024. However, this trend reversed starting in 2025, as the number of days steadily increased, culminating in a peak of 96 days by September 30, 2026.

The inverse relationship between the turnover ratio and the collection period is consistent across the entire timeframe. The data indicates that while the company achieved optimal credit recovery speeds at the end of 2024, there has been a progressive lengthening of the collection cycle throughout 2025 and 2026, suggesting a potential slowing in cash inflows from customers.

The operating cycle exhibits a cyclical pattern characterized by a period of significant efficiency improvements between 2022 and late 2024, followed by a gradual expansion of the cycle through 2026. The overall duration fluctuates from a peak of 162 days to a minimum of 136 days, reflecting the combined volatility of inventory management and credit collection processes.

Average Inventory Processing Period

A consistent downward trend is observed from March 2022 (69 days) through December 2024, where the period reached its lowest point of 55 days. This suggests a period of enhanced inventory turnover and operational efficiency. However, this trend reversed starting in 2025, with the processing period increasing and eventually stabilizing at 65 days by the end of the analyzed period in September 2026.

Average Receivable Collection Period

The collection period represents the most significant component of the operating cycle and displays notable volatility. While the period remained relatively stable around 90 days for much of 2022 and 2023, a marked improvement occurred in December 2024, reaching a low of 81 days. Subsequently, a steady increase is evident throughout 2025 and 2026, culminating in a peak of 96 days by September 2026, indicating a slowing of cash inflows from customers.

Operating Cycle Integration

The total operating cycle is heavily influenced by the synchronization of inventory and receivable durations. The most efficient operational phase occurred in December 2024, when both metrics reached their minimums, resulting in a cycle of 136 days. The subsequent rise in the operating cycle to 161 days by September 2026 is attributed to the simultaneous increase in both the time required to process inventory and the time taken to collect receivables, effectively returning the company to the operational baseline observed in early 2022.