Schlumberger Ltd. (NYSE:SLB)

Inventory Turnover

The inventory turnover ratio displayed a slight decline from 6.26 in 2020 to 5.73 in 2022 before recovering to 6.59 by the end of 2024. This indicates an initial slowdown in the speed at which inventory was sold and replaced, followed by an improvement, suggesting enhanced efficiency in inventory management in the latter years.

Receivables Turnover

The receivables turnover ratio trended downward from 4.5 in 2020 to 3.99 in 2022, indicating slower collection of receivables. However, it improved to 4.53 by 2024, nearly returning to the 2020 level, implying a positive shift toward quicker collection periods in recent periods.

Payables Turnover

Payables turnover experienced a decline from 7.15 in 2020 to 5.76 in 2023, reflecting slower payment to suppliers. This ratio increased significantly to 6.82 in 2024, indicating that the company started settling its payables faster towards the end of the period.

Working Capital Turnover

Working capital turnover showed a consistent reduction from 9.72 in 2020 to 6.3 in 2024. This suggests a decreasing efficiency in using working capital to generate sales, with a notable decline from 2022 onward, which could imply higher working capital requirements or lower sales growth efficiency.

Average Inventory Processing Period

The average inventory processing period increased from 58 days in 2020 to a peak of 64 days in 2022, then shortened to 55 days by 2024. This pattern aligns inversely with the inventory turnover ratio, reflecting changes in inventory management efficiency with an overall improvement in recent years.

Average Receivable Collection Period

The average receivable collection period extended from 81 days in 2020 to 91 days in 2022, followed by a reduction to 81 days in 2024. This mirrors the trend observed in receivables turnover, with a period of slower collections soon followed by enhanced collection efforts.

Operating Cycle

The operating cycle lengthened from 139 days in 2020 to a peak of 155 days in 2022, then shortened to 136 days by 2024. This reflects the combined effects of changes in inventory processing and receivables collection periods, indicating operational efficiency improvements after 2022.

Average Payables Payment Period

The average payables payment period increased steadily from 51 days in 2020 to 63 days in 2023, implying a longer time taken to pay suppliers. It then decreased to 54 days in 2024, suggesting a reversal toward quicker payments at the end of the timeframe.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable, fluctuating between 82 and 93 days across the years. It peaked at 93 days in 2022 and improved slightly to 82 days in 2024, indicating a stable overall efficiency in converting investments in inventory and other resources into cash flows from sales.

The cost of revenue exhibits an overall upward trend during the five-year period analyzed. Beginning at $21,000 million in 2020, it decreased slightly in 2021 to $19,271 million. However, it subsequently increased each year, reaching $28,829 million in 2024, which indicates rising costs associated with the production or procurement of goods and services delivered by the company.

Inventories generally show growth over the same timeframe. The inventory balance started at $3,354 million in 2020, slightly declined to $3,272 million in 2021, and then increased steadily to $4,387 million by 2023. In 2024, there was a marginal decrease to $4,375 million, suggesting a stabilization of inventory levels at higher amounts compared to the earlier years.

The inventory turnover ratio, which measures how frequently inventory is sold and replaced over a period, demonstrated some fluctuations but an overall rising trend. Starting at 6.26 times in 2020, the ratio dipped to 5.89 in 2021 and further to 5.73 in 2022, which may indicate a slowing of inventory movement during those years. However, the ratio recovered to 6.06 in 2023 and increased further to 6.59 in 2024, signifying improved efficiency in managing and selling inventory in the latter years.

Cost of Revenue

Decreased in 2021 but increased significantly afterward, reaching the highest value in 2024, reflecting rising costs associated with business operations.

Inventories

Initially decreased slightly but generally rose through 2023 before stabilizing in 2024, indicating increased stocking or accumulation of goods.

Inventory Turnover Ratio

Declined during 2021 and 2022 but improved in the subsequent years, suggesting better inventory management and sales efficiency toward the end of the period.

Revenue

The revenue demonstrates a consistent upward trend over the five-year period. Starting at 23,601 million USD in 2020, it experienced a slight decline in 2021 to 22,929 million USD. However, from 2021 onward, revenue rose significantly, reaching 28,091 million USD in 2022, 33,135 million USD in 2023, and 36,289 million USD in 2024. This overall increase indicates ongoing growth and expansion in the company's sales or service activities.

Receivables less allowance for doubtful accounts

Receivables exhibit a steady increase over the years, beginning at 5,247 million USD in 2020 and increasing slightly to 5,315 million USD in 2021. The growth accelerates in subsequent years, reaching 7,032 million USD in 2022, 7,812 million USD in 2023, and 8,011 million USD in 2024. This pattern suggests an increasing amount of credit extended to customers or slower collection of receivables, which may warrant monitoring to mitigate credit risk or cash flow impacts.

Receivables turnover ratio

The receivables turnover ratio initially declined from 4.5 in 2020 to 4.31 in 2021, and further to 3.99 in 2022, indicating a slower collection rate of receivables during this period. However, there is a recovery trend in the following years, with the ratio improving to 4.24 in 2023 and reaching 4.53 in 2024, surpassing the start level. This improvement suggests more efficient collection processes or improved cash management in the latter years.

Cost of Revenue

The cost of revenue shows a fluctuating but overall upward trend over the periods analyzed. Starting at 21,000 million USD in 2020, it decreased slightly in 2021 to 19,271 million USD, indicating a possible reduction in direct costs or operational expenses during that year. However, from 2021 onwards, the cost increased consistently, reaching 28,829 million USD by the end of 2024. This steady increase could be reflective of higher production costs, increased sales volumes, or inflationary pressures impacting input costs.

Trade Accounts Payable

Trade accounts payable have risen significantly from 2020 to 2023, starting at 2,937 million USD and peaking at 4,613 million USD in 2023. This increase suggests the company has been taking longer to pay its suppliers or has been purchasing more on credit. Interestingly, there is a decline in 2024 to 4,230 million USD, which may indicate tighter management of payables, improved cash flows, or a strategic shift to reduce outstanding obligations.

Payables Turnover Ratio

The payables turnover ratio decreased from 7.15 in 2020 to 5.76 in 2023, implying that the company was slower in settling its payables over these years. This deterioration in turnover rate corresponds with the rising accounts payable balance. However, in 2024, the ratio increased to 6.82, indicating a significant improvement in the speed of payment to suppliers. This improvement suggests enhanced efficiency in managing payables, which could contribute positively to supplier relationships and credit terms.

Working Capital

The working capital exhibited a consistent upward trend from 2020 to 2024. Starting at 2,428 million US dollars in 2020, it slightly decreased in 2021 to 2,295 million, then showed substantial increases in subsequent years, reaching 2,985 million in 2022, 4,323 million in 2023, and 5,759 million in 2024. This indicates a strengthening of the company's short-term financial position over this period.

Revenue

Revenue experienced a fluctuating but overall increasing pattern. It decreased marginally from 23,601 million US dollars in 2020 to 22,929 million in 2021. Following this, revenue grew significantly to 28,091 million in 2022, and then continued to rise to 33,135 million in 2023 and 36,289 million in 2024. This reflects strong top-line growth after an initial dip, suggesting recovery and expansion in business operations.

Working Capital Turnover

The working capital turnover ratio declined steadily throughout the period. Beginning at 9.72 in 2020, it increased slightly to 9.99 in 2021, indicating marginally better efficiency initially. However, it then decreased to 9.41 in 2022, followed by more pronounced reductions in 2023 and 2024, down to 7.66 and 6.30 respectively. This trend suggests that despite increasing revenue, the company is generating less revenue per unit of working capital, potentially indicating reduced efficiency in utilizing working capital to support sales.

Overall Insights

The data indicates that while both working capital and revenue have grown substantially, the efficiency of working capital usage has diminished over time. The consistent increase in working capital points to rising investment in current assets or slower turnover, while revenue growth demonstrates expanding business activity. The decline in working capital turnover ratio warrants attention as it may reflect operational inefficiencies or changes in working capital management.

Inventory Turnover

The inventory turnover ratio experienced a slight decline from 6.26 in 2020 to 5.73 in 2022, indicating a reduction in the frequency with which inventory was sold and replaced during this period. However, beginning in 2023, there was a noticeable improvement, with the ratio increasing to 6.06 and further to 6.59 in 2024. This upward trend in the later years suggests enhanced operational efficiency in managing and selling inventory.

Average Inventory Processing Period

Conversely, the average inventory processing period, measured in days, moved inversely to the inventory turnover. It extended from 58 days in 2020 to a peak of 64 days in 2022, implying a longer duration to process inventory. From 2023 onwards, this period shortened significantly to 60 days and then to 55 days in 2024. The reduction in the processing time aligns with the increase in inventory turnover, reinforcing the interpretation of improved inventory management.

Overall Insights

The data reveals that during the initial three-year timeframe there was a mild deterioration in inventory efficiency, as seen in decreasing turnover and increasing processing days. Subsequently, the company appears to have implemented more effective inventory controls or strategies, leading to a rebound in turnover rates and a decreased inventory holding period by the end of 2024. These developments suggest a positive operational adjustment that could enhance liquidity and reduce holding costs.

Receivables Turnover

The receivables turnover ratio exhibits a general decline from 4.5 in 2020 to a low point of 3.99 in 2022, indicating a decreased efficiency in collecting receivables during this period. Subsequently, the ratio recovers somewhat, increasing to 4.24 in 2023 and further to 4.53 in 2024, suggesting improved collection effectiveness toward the end of the period analyzed.

Average Receivable Collection Period

Inversely related to the receivables turnover, the average receivable collection period shows an increasing trend from 81 days in 2020 to a peak of 91 days in 2022, implying a lengthening of the time taken to collect receivables. Thereafter, the period decreases to 86 days in 2023 and returns to the initial level of 81 days by 2024, reflecting a restoration of more rapid receivables collection.

Overall Trend Analysis

Between 2020 and 2022, the company experienced a deterioration in receivables management efficiency, with slower collection processes as evidenced by declining turnover and increasing collection days. However, during 2023 and 2024, operational improvements are apparent, with metrics reversing to levels comparable to the beginning of the period. This pattern suggests successful measures were likely implemented to enhance accounts receivable management and cash flow timing.

Average inventory processing period

This metric shows a fluctuating trend over the five-year period. It increased from 58 days in 2020 to 64 days in 2022, indicating a lengthening in the time taken to process inventory. However, it decreased to 60 days in 2023 and further to 55 days in 2024, suggesting improvements in inventory management and efficiency in the most recent years.

Average receivable collection period

The receivable collection period experienced a rise from 81 days in 2020 to a peak of 91 days in 2022, reflecting a lengthening in the time taken to collect receivables. Subsequently, it declined to 86 days in 2023 and further down to 81 days in 2024, returning to the initial level observed in 2020. This pattern suggests a temporary decrease in collection efficiency followed by recovery.

Operating cycle

The operating cycle, which represents the total time from inventory processing through to receivable collection, follows a similar pattern to the components above. It increased from 139 days in 2020 to a high of 155 days in 2022, indicating a lengthening of overall operational activity duration. This cycle shortened in the following years to 146 days in 2023 and 136 days in 2024, demonstrating an overall trend toward improved operational turnover compared to the mid-period peak.

Payables Turnover

The payables turnover ratio exhibits a declining trend from 7.15 in 2020 to 5.76 in 2023, indicating a gradual reduction in the frequency with which the company settles its payables during these years. However, in 2024, the payables turnover ratio rebounds to 6.82, suggesting an improvement in payment efficiency compared to the previous two years but remaining below the 2020 level.

Average Payables Payment Period

The average payables payment period shows an increasing trend from 51 days in 2020 up to 63 days in 2023, revealing that the company has been extending the time it takes to pay its suppliers. This elongation of the payment period may reflect a strategic management of cash outflows or changes in creditor terms. In 2024, this value decreases to 54 days, which aligns with the increased payables turnover ratio for the same year, indicating a faster payment cycle.

Overall Insights

The inverse relationship between the payables turnover ratio and the average payables payment period is consistent, as expected. The narrowing of the turnover ratio and lengthening of days payable through 2023 suggest a trend towards more stretched payment terms, potentially aimed at preserving liquidity. The reversal of these trends in 2024 implies a shift toward quicker payment practices and improved payables management, which may positively impact supplier relationships and overall operational efficiency.

Average Inventory Processing Period

The inventory processing period displayed an initial upward trend, rising from 58 days in 2020 to a peak of 64 days in 2022. After this peak, there was a decrease to 60 days in 2023 and a further reduction to 55 days in 2024, indicating improved efficiency in inventory management towards the end of the period under review.

Average Receivable Collection Period

The receivable collection period generally increased from 81 days in 2020 to a high of 91 days in 2022. Subsequently, it declined to 86 days in 2023 and returned to the initial level of 81 days in 2024, suggesting an improvement in the company's ability to collect receivables more quickly after a period of lengthening collection times.

Average Payables Payment Period

The payables payment period lengthened consistently from 51 days in 2020 to 63 days in 2023, reflecting a strategy or necessity to extend payment terms with suppliers. However, there was a noticeable reduction to 54 days in 2024, indicating a shift toward faster payment practices in the most recent year.

Cash Conversion Cycle

The cash conversion cycle fluctuated throughout the period. It remained relatively stable between 88 and 93 days from 2020 through 2022, peaking at 93 days in 2022. In 2023, a substantial reduction to 83 days was observed, followed by a slight further decrease to 82 days in 2024, which suggests an overall improvement in the company's efficiency in managing its working capital and cash flow.