SLB N.V. (NYSE:SLB)

An analysis of short-term operating activity ratios reveals several trends over the five-year period. Generally, the company demonstrates moderate fluctuations in its efficiency of managing current assets and liabilities. Inventory turnover shows an initial decrease followed by an increase, while receivables and payables turnover exhibit more consistent, albeit modest, changes. Working capital turnover demonstrates a more pronounced decline mid-period before a partial recovery.

Inventory Management

Inventory turnover remained relatively stable, fluctuating between 5.73 and 6.59. A slight increase is observed from 2022 to 2024, followed by a decrease in the final year. Correspondingly, the average inventory processing period decreased from 62 days in 2021 to 55 days in 2024, before increasing slightly to 63 days in 2025. This suggests improving efficiency in inventory management through 2024, with a slight reversal in the most recent year.

Receivables Management

Receivables turnover experienced a slight decline from 4.31 in 2021 to 3.99 in 2022, followed by a recovery to 4.53 in 2024, and a subsequent decrease to 4.11 in 2025. The average receivable collection period increased from 85 days in 2021 to 91 days in 2022, then decreased to 81 days in 2024, and increased again to 89 days in 2025. These movements indicate some inconsistency in the speed of collecting receivables, with a lengthening collection period in the initial and final years of the period.

Payables Management

Payables turnover showed a modest decrease from 6.01 in 2021 to 5.76 in 2023, followed by a notable increase to 6.82 in 2024, and a return to 6.01 in 2025. The average payables payment period remained relatively stable between 61 and 63 days for the first four years, decreasing to 54 days in 2024 before returning to 61 days in 2025. This suggests a potential shift in payment terms or supplier relationships in 2024, with a reversion to previous practices in the final year.

Overall Operating Cycle & Cash Conversion Cycle

The operating cycle increased from 147 days in 2021 to 155 days in 2022, then decreased to 136 days in 2024, and increased to 152 days in 2025. The cash conversion cycle followed a similar pattern, increasing from 86 days to 93 days, decreasing to 82 days, and increasing to 91 days. The fluctuations in both cycles are likely influenced by the combined effects of changes in inventory processing, receivable collection, and payables payment periods. The decrease in both cycles in 2024 suggests improved efficiency in converting investments in working capital into cash, but this improvement was not sustained into 2025.

Working Capital Efficiency

Working capital turnover decreased from 9.99 in 2021 to 6.30 in 2024, indicating a less efficient utilization of working capital. A partial recovery to 7.45 is observed in 2025, but the ratio remains below the initial level. This suggests a potential increase in the investment in working capital relative to revenue generated, or a decrease in revenue generation relative to working capital employed.

The analysis reveals fluctuations in inventory turnover over the five-year period. Cost of revenue demonstrates a consistent upward trend, while inventory levels also generally increase, though with some variation. These movements influence the calculated inventory turnover ratio.

Inventory Turnover Trend

The inventory turnover ratio experienced a slight decrease from 5.89 in 2021 to 5.73 in 2022. A subsequent increase was observed in 2023, reaching 6.06. This upward momentum continued into 2024, with the ratio rising to 6.59, representing the highest value within the observed period. However, in 2025, the ratio decreased to 5.80.

Cost of Revenue

Cost of revenue increased steadily throughout the period, moving from US$19,271 million in 2021 to US$29,201 million in 2025. The rate of increase appears relatively consistent year-over-year, suggesting stable production costs or sales volume growth.

Inventory Levels

Inventories increased from US$3,272 million in 2021 to US$5,032 million in 2025. The increase from 2022 to 2023 was US$388 million, while the increase from 2023 to 2024 was minimal, at US$12 million. The largest single-year increase occurred between 2024 and 2025, with inventories rising by US$657 million. This suggests a potential build-up of inventory in the most recent year.

The combination of rising cost of revenue and fluctuating inventory levels results in the observed inventory turnover pattern. The peak in 2024 suggests efficient inventory management during that year, while the decline in 2025, despite continued revenue growth, indicates a slower rate of inventory conversion into sales.

The receivables turnover ratio exhibits fluctuations over the five-year period. While revenue generally increased, the receivables turnover ratio did not consistently follow suit, indicating a complex relationship between sales and the efficiency of collecting receivables.

Overall Trend

The receivables turnover ratio decreased from 4.31 in 2021 to 3.99 in 2022, then recovered to 4.24 in 2023. A further increase to 4.53 was observed in 2024, followed by a slight decline to 4.11 in 2025. This suggests a period of initial inefficiency in collecting receivables, followed by improvement, and then a leveling off.

Relationship to Revenue

Revenue increased from US$22,929 million in 2021 to US$36,289 million in 2024, before decreasing slightly to US$35,708 million in 2025. The initial decrease in receivables turnover in 2022, despite rising revenue, suggests a potential slowdown in the collection process or a change in credit terms extended to customers. The subsequent increase in receivables turnover in 2023 and 2024, alongside continued revenue growth, indicates improved efficiency. The slight decrease in receivables turnover in 2025, concurrent with a minor revenue decrease, suggests a continued correlation between sales and collection efficiency.

Receivables Balance

Receivables less allowance for doubtful accounts increased consistently throughout the period, from US$5,315 million in 2021 to US$8,689 million in 2025. This growth in receivables, while occurring alongside revenue increases, may contribute to the fluctuations observed in the receivables turnover ratio. The rate of increase in receivables appears to have outpaced the rate of revenue increase at times, potentially impacting the ratio.

In conclusion, the receivables turnover ratio demonstrates a dynamic pattern. While generally indicating a reasonable ability to convert receivables into cash, the fluctuations warrant further investigation into the underlying factors influencing collection periods and credit policies.

The analysis of payables turnover reveals a generally stable, yet fluctuating, pattern over the five-year period. While cost of revenue consistently increased, the corresponding changes in trade payables and the resulting turnover ratio demonstrate a more complex relationship.

Payables Turnover Trend

The payables turnover ratio experienced a slight decline from 6.01 in 2021 to 5.76 in 2023. This suggests a modestly slower rate of paying suppliers during this period. However, a notable increase to 6.82 was observed in 2024, indicating a significantly faster turnover. The ratio then decreased to 6.01 in 2025, returning to the level observed in 2021.

Relationship to Cost of Revenue

Cost of revenue increased each year, from US$19,271 million in 2021 to US$29,201 million in 2025. Trade payables also generally increased, moving from US$3,205 million to US$4,859 million over the same period. The increase in payables did not consistently offset the growth in cost of revenue, contributing to the initial decline in the payables turnover ratio. The substantial increase in turnover in 2024 suggests either a significant reduction in payables relative to cost of revenue, or a deliberate strategy to accelerate payments to suppliers.

Payables Management

The fluctuations in the payables turnover ratio suggest potential shifts in payables management strategies. The 2024 spike warrants further investigation to understand the underlying cause. The return to a ratio of 6.01 in 2025 indicates a possible normalization of payment practices following the 2024 change. Overall, the company appears to generally manage its payables effectively, maintaining a turnover ratio within a relatively narrow range, despite increasing operational costs.

In conclusion, the payables turnover ratio demonstrates a dynamic relationship with cost of revenue, exhibiting both periods of decline and significant improvement. Continued monitoring of this ratio, alongside a deeper understanding of the factors driving its fluctuations, is recommended.

The working capital turnover ratio exhibited a declining trend from 2021 to 2024, followed by a slight increase in the most recent period. This indicates a changing relationship between working capital and revenue generation over the analyzed timeframe.

Working Capital

Working capital increased consistently from 2021 to 2023, reaching 4,323 US$ millions. A subsequent decrease was observed in 2024, followed by a further reduction in 2025 to 4,792 US$ millions. This suggests fluctuations in the company’s short-term asset and liability management.

Revenue

Revenue demonstrated consistent growth from 2021 to 2024, increasing from 22,929 US$ millions to 36,289 US$ millions. A slight decrease in revenue was noted in 2025, settling at 35,708 US$ millions. This indicates a generally positive revenue trajectory with a recent stabilization.

Working Capital Turnover

The working capital turnover ratio decreased from 9.99 in 2021 to 6.30 in 2024. This signifies that the company became less efficient in utilizing its working capital to generate revenue during this period. The ratio experienced a modest recovery in 2025, rising to 7.45. This suggests a partial improvement in working capital efficiency, but remains below the levels observed in the earlier years of the analysis. The initial decline could be attributed to faster growth in working capital relative to revenue, or slower revenue growth relative to working capital. The 2025 increase suggests a rebalancing of these factors.

The observed trends suggest a potential shift in operational strategies or external factors impacting the company’s working capital management. Further investigation into the components of working capital (accounts receivable, inventory, accounts payable) and the drivers of revenue growth is recommended to fully understand these dynamics.

The period under review demonstrates fluctuations in inventory management efficiency. Analysis focuses on the inventory turnover ratio and its corresponding average inventory processing period.

Inventory Turnover

The inventory turnover ratio exhibited a slight decrease from 5.89 in 2021 to 5.73 in 2022. A subsequent increase was observed, reaching 6.06 in 2023 and peaking at 6.59 in 2024. The ratio then decreased to 5.80 in 2025, returning to a level comparable to that of 2021. This pattern suggests periods of improved and then diminished efficiency in converting inventory into sales.

Average Inventory Processing Period

The average inventory processing period showed a modest increase from 62 days in 2021 to 64 days in 2022. This was followed by a decrease to 60 days in 2023 and a more substantial reduction to 55 days in 2024. In 2025, the period increased again, reaching 63 days. This trend generally mirrors the inverse relationship expected with the inventory turnover ratio; as turnover increases, the processing period tends to decrease, and vice versa.

The observed correlation between the inventory turnover ratio and the average inventory processing period indicates a consistent, though variable, relationship. The peak in inventory turnover in 2024 coincided with the lowest processing period, suggesting optimal inventory management during that year. The return to levels seen in 2021 in 2025 warrants further investigation to determine the underlying causes of the shift in efficiency.

The average receivable collection period exhibited fluctuations over the five-year period. While generally remaining within a relatively narrow range, observable shifts indicate changes in the efficiency of collecting receivables.

Average Receivable Collection Period

The average receivable collection period increased from 85 days in 2021 to 91 days in 2022, representing a lengthening in the time taken to collect outstanding invoices. A subsequent decrease was noted in 2023, with the period falling to 86 days. This downward trend continued into 2024, reaching a low of 81 days. However, in 2025, the period increased again, rising to 89 days.

The initial increase in 2022 may suggest a slowdown in customer payments or a change in credit terms. The improvements observed in 2023 and 2024 indicate a strengthening of collection efforts or more favorable payment patterns. The rise in 2025 warrants further investigation to determine the underlying cause, such as potential issues with specific customers or a broader economic slowdown impacting payment behavior.

The fluctuations in the average receivable collection period should be considered in conjunction with other financial metrics and operational factors to gain a comprehensive understanding of the company’s working capital management. Further analysis should focus on identifying the drivers behind the changes observed in 2022 and 2025.

The operating cycle exhibited fluctuations over the five-year period. While generally remaining within a range of 136 to 155 days, discernible trends emerge upon examining the individual components and the cycle as a whole.

Average Inventory Processing Period

The average inventory processing period demonstrated relative stability, fluctuating between 60 and 64 days. A slight increase was noted from 62 days in 2021 to 64 days in 2022, followed by a decrease to 60 days in 2023. A further reduction to 55 days occurred in 2024, representing the lowest value in the observed period, before increasing again to 63 days in 2025. This suggests potential efficiencies in inventory management during 2024, though this improvement was not sustained into the following year.

Average Receivable Collection Period

The average receivable collection period showed a more pronounced upward trend initially. It increased from 85 days in 2021 to 91 days in 2022, and then to 86 days in 2023. A decrease to 81 days was observed in 2024, indicating improved collection efficiency. However, this improvement was reversed in 2025, with the period increasing to 89 days, the highest value recorded during the period. This suggests potential challenges in collecting receivables in the most recent year.

Operating Cycle

The operating cycle mirrored the combined effect of the inventory and receivable periods. It increased from 147 days in 2021 to 155 days in 2022, reaching its highest point in the observed period. A decrease to 146 days occurred in 2023, followed by a more substantial reduction to 136 days in 2024, driven by improvements in both inventory processing and receivable collection. The cycle then lengthened to 152 days in 2025, primarily due to the increase in the receivable collection period, offsetting the relatively stable inventory processing period.

Overall, the operating cycle demonstrated a degree of volatility. The improvements observed in 2024 were not maintained, as evidenced by the lengthening cycle in 2025. Further investigation into the factors driving the receivable collection period in 2025 would be warranted to understand the underlying causes and potential implications for liquidity.

The average payables payment period exhibited a generally increasing trend from 2021 through 2023, followed by a decrease in 2024, and a return to the initial level in 2025. This suggests fluctuations in the company’s management of its payment obligations to suppliers over the analyzed period.

Payables Turnover

Payables turnover decreased from 6.01 in 2021 to 5.76 in 2023, indicating a slowing in the rate at which the company paid off its suppliers. However, a notable increase to 6.82 was observed in 2024, suggesting improved efficiency in payables management. The ratio then decreased to 6.01 in 2025, returning to the level observed in the initial year.

Average Payables Payment Period

The average payables payment period increased from 61 days in 2021 to 63 days in 2023. This lengthening of the payment period could be attributed to various factors, including negotiating extended payment terms with suppliers or a deliberate strategy to preserve cash. The period then decreased significantly to 54 days in 2024, likely corresponding with the increased payables turnover. In 2025, the period reverted to 61 days, aligning with the 2021 level.

The inverse relationship between payables turnover and the average payables payment period is evident. As payables turnover decreases, the payment period tends to increase, and vice versa. The fluctuations observed in both metrics suggest a dynamic approach to managing supplier relationships and working capital.

The return to initial levels in 2025 for both metrics indicates a potential stabilization of payables management practices after the changes observed between 2021 and 2024. Further investigation would be required to understand the underlying drivers of these changes and their impact on the company’s overall financial health.

The short-term operating activity ratios indicate fluctuations in the company’s efficiency in managing its working capital over the five-year period. Specifically, the average inventory processing period, average receivable collection period, average payables payment period, and the resulting cash conversion cycle all exhibit varying trends.

Average Inventory Processing Period

The average inventory processing period remained relatively stable, fluctuating between 60 and 64 days. An initial increase from 62 days in 2021 to 64 days in 2022 was followed by a decrease to 60 days in 2023 and further to 55 days in 2024. A slight increase to 63 days is observed in the final year of the period.

Average Receivable Collection Period

The average receivable collection period demonstrated an increasing trend from 85 days in 2021 to a peak of 91 days in 2022. This was followed by a decrease to 86 days in 2023 and 81 days in 2024. The period then increased again to 89 days in 2025.

Average Payables Payment Period

The average payables payment period remained largely consistent between 61 and 63 days for the first three years. A notable decrease to 54 days occurred in 2024, before returning to 61 days in 2025.

Cash Conversion Cycle

The cash conversion cycle initially increased from 86 days in 2021 to 93 days in 2022, reflecting the increases in both inventory processing and receivable collection periods. A decrease to 83 days in 2023 and 82 days in 2024 was observed, driven by improvements in both inventory and receivables management, as well as a shorter payables period in 2024. The cycle then increased to 91 days in 2025, influenced by increases in both the receivable collection period and the inventory processing period.

Overall, the company experienced some volatility in its cash conversion cycle. While improvements were made in 2023 and 2024, the cycle lengthened again in 2025. The fluctuations in the individual components suggest a dynamic relationship between inventory management, credit policies, and supplier payment terms.