Schlumberger Ltd. (NYSE:SLB)

Inventory turnover

The inventory turnover ratio, which measures how efficiently inventory is managed, shows a generally stable and slightly increasing trend from March 2021 onward. Starting at 6.26 in March 2021, it fluctuated mildly within the range of approximately 5.19 to 6.59 over the subsequent quarterly periods. Notably, from March 2023 through March 2025, the ratio has gradually improved, reaching a peak of 6.59 in September 2024, indicating enhanced inventory utilization efficiency.

Receivables turnover

The receivables turnover ratio exhibits a relatively stable trend with minor fluctuations. It began at 4.5 in March 2021, dipped slightly in mid-2021, and mostly hovered between 3.94 and 4.36 thereafter. The most recent values indicate an improvement, reaching 4.53 in September 2024 before slightly declining again. This stability suggests consistent collection efficiency of accounts receivable over the analyzed timeframe.

Working capital turnover

This ratio displays significant volatility and lacks a clear directional trend. After starting at 9.72 in March 2021, it experienced a pronounced decline to below 6 in some quarters (June and September 2022), followed by intermittent recoveries. The value reached a low of 5.75 in September 2024 but surged back to 10.14 by March 2025, marking the highest point noted. These fluctuations imply varying effectiveness in using working capital to generate sales, potentially influenced by shifting operational or market conditions.

Average inventory processing period (days)

The average inventory processing period remained fairly stable with moderate fluctuations across the analyzed quarters. Beginning at 58 days in March 2021, it rose towards the high 60s in mid-2022, peaking at 70 days in September 2022, then exhibited a gradual decline afterward. Recently, values have trended downward to 55 days in September 2024, indicating an improvement in inventory turnover speed and potentially more efficient inventory management.

Average receivable collection period (days)

This period showed minor variability, generally fluctuating around the high 80s to low 90s of days. It started at 81 days in March 2021, increased to above 90 days in several quarters (especially from June 2021 to December 2022), and then moved back toward the low 80s to mid-80s range more recently. The slight reduction in the collection period in the latest periods suggests marginal improvements in receivables management and faster cash inflows.

Operating cycle (days)

The operating cycle, representing the sum of inventory processing and receivable collection periods, shows a fluctuating but moderately declining trend overall. It ranged from 139 days in March 2021 up to a peak of 162 days in September 2022. Subsequently, it trended downward to 136 days in September 2024 before increasing slightly to 146 days by March 2025. This indicates some variability in the full cash conversion process, but with signs of improved operational efficiency towards the end of the period.

The financial data over the reported periods reveals several notable trends regarding cost of revenue, inventories, and inventory turnover.

Cost of revenue

The cost of revenue exhibited an initial decline from $6,624 million in March 2020 to a low of approximately $4,504 million in March 2021, reflecting a significant contraction during this timeframe. Following this trough, there was a gradual and consistent increase through subsequent quarters, reaching a peak near $7,323 million in December 2024, before slightly decreasing to $6,884 million in March 2025. This overall pattern suggests a recovery and expansion phase after early 2021, although the slight dip in the latest quarter may indicate emerging cost pressures or adjustments.

Inventories

Inventories started at $4,148 million in March 2020 and experienced a steady decrease until reaching the lowest level of about $3,267 million around mid-2021. From this point, inventories increased progressively, peaking at $4,650 million in March 2025. The general upward trend in inventories post-mid-2021 suggests restocking activities or anticipation of higher production or sales volumes, despite some minor fluctuations in the recent quarters.

Inventory turnover

The inventory turnover ratio data begins only from September 2020, at 6.26, decreasing to about 5.72-5.75 during late 2020 and early 2021. Throughout 2021 and into early 2022, turnover ratios generally declined slightly, reaching lows around 5.19-5.25. Subsequently, this ratio showed a gradual improvement, rising consistently to a high of 6.59 in September 2024, before a small decrease to 6.17 in the latest quarter. The improving turnover ratio after early 2022 indicates enhanced inventory management efficiency or stronger sales performance relative to inventory levels.

In summary, the early 2020 to mid-2021 period was characterized by decreased costs and shrinking inventories, likely reflecting reduced business activity. Thereafter, cost of revenue and inventories both increased notably, aligning with a recovery and growth phase. The inventory turnover ratio trends corroborate improvements in operational efficiency following an initial dip, suggesting better alignment between inventory levels and sales activities in the more recent years.

Revenue Trends

Revenue exhibited a significant decline from March 2020 to September 2020, dropping from 7,455 million US dollars to 5,258 million US dollars. This downward trend reversed gradually beginning December 2020. From March 2021 onward, revenue showed a steady recovery with intermittent increases each quarter, peaking at 9,284 million US dollars by December 2024. The subsequent quarter, March 2025, saw a decline to 8,490 million US dollars. Overall, the data suggests recovery and growth post-2020, although with some volatility near the end of the observed period.

Receivables (Less Allowance for Doubtful Accounts)

The receivables balance closely mirrored revenue trends but with less pronounced fluctuations. Starting at 7,486 million US dollars in March 2020, receivables decreased to 5,247 million by December 2020. From that point, there was a gradual increase reaching a high of 8,604 million US dollars in September 2024, followed by a moderate decline to 8,011 million at December 2024 and a slight recovery back to 8,604 million in March 2025. This pattern indicates increased credit extended to customers alongside revenue growth, with some variability towards the end.

Receivables Turnover Ratio

The receivables turnover ratio, available starting March 2020, showed a decline from 4.50 to around 3.94 between March 2020 and March 2023, indicating a slight deceleration in the efficiency of collecting receivables during this period. After March 2023, the ratio fluctuated moderately, rising to a peak of 4.53 in March 2025, suggesting improvements in collection efficiency in more recent quarters. The pattern suggests temporary softness in collections efficiency post-pandemic, with a recovery trend in later quarters.

Overall Insights

The observed financial data points to an initial negative impact likely correlated with broader economic conditions around early 2020, followed by a gradual recovery phase over the subsequent years. Revenue and receivables increased substantially post-2020, reflecting stronger operational performance or market conditions. The receivables turnover ratio shows an initial deterioration with a later improvement, indicating that the company faced some challenges in collections which improved in later periods. The combination of rising revenue and receivables with improving turnover ratio towards the end of the timeline denotes strengthening operational effectiveness and credit management.

Working Capital Trends

The working capital displays a fluctuating pattern over the period analyzed. From March 31, 2020, to March 31, 2021, it initially declines from 3004 million US dollars to a lower point at 2295 million in December 31, 2020, before recovering to 2934 million by March 31, 2021. Subsequently, it shows volatility with peaks and troughs; notable increases occur around June and September 2022, reaching a high of 4477 million, and again between June and September 2023, peaking at 4510 million. The highest recorded values appear in 2024, where working capital exceeds 6000 million US dollars twice, before sharply declining to 3559 million by March 31, 2025. This indicates varying liquidity levels and potential shifts in operational efficiency or asset management.

Revenue Trends

Revenue exhibits a general upward trend across the reporting quarters, starting at 7455 million US dollars in March 31, 2020, and experiencing a decline during mid-2020 to a low point in September 30, 2020, at 5258 million. From then on, revenue gradually improves with minor fluctuations, reaching a peak close to 9284 million in December 31, 2024. The data suggest consistent growth momentum despite short-term setbacks, particularly notable after June 2021. However, a slight decline is observed after December 2024, ending at 8490 million in March 31, 2025.

Working Capital Turnover Analysis

The working capital turnover ratio is available from September 30, 2020, onwards and shows variability that largely mirrors working capital and revenue movements. The ratio started high at 9.72, then declined to its lowest around 5.75-6.3 in the quarters spanning late 2023 to 2024, indicating a decrease in revenue generated per unit of working capital. This decline suggests a temporary reduction in operational efficiency or capital utilization during that period. However, a significant increase to 10.14 by March 31, 2025, demonstrates a marked improvement in efficiency, potentially due to better management of current assets and liabilities or an increase in revenue relative to working capital.

Overall Insights

Overall, the data indicates a company managing through periods of economic or operational challenges, with working capital and revenue showing fluctuations linked to market or internal factors. The company appears to regain stability and improve revenue generation capacity as evidenced by the increasing trend in both revenue and working capital in 2022 and 2023. The working capital turnover ratio, reflecting efficiency, aligns with these patterns, showing both periods of decline and recovery. The sharp fluctuations in working capital, especially the peak in 2024 followed by a drop in early 2025, necessitate attention to working capital management practices in relation to sustaining revenue growth and operational effectiveness.

The inventory turnover ratio shows a notable pattern over the examined periods. Starting from the first available data point in March 2020, the ratio initially decreases from 6.26 to a low near 5.19 by the third quarter of 2022. This suggests a slowing in the number of times the inventory is sold and replaced during these quarters. After this decline, the inventory turnover ratio trends upward, reaching a high of 6.59 by the third quarter of 2024, indicating improved inventory management or increased sales efficiency towards the end of the period.

Correspondingly, the average inventory processing period, measured in days, inversely mirrors the turnover ratio trend as expected. Beginning at 58 days in March 2020, it increases to a peak of approximately 70 days in the third quarter of 2022, reflecting longer holding periods for inventory during that timeframe. Following this peak, the processing period steadily declines to about 55 days by the third quarter of 2024, suggesting a reduction in the time inventory remains before being sold or processed.

Overall, the trends indicate that inventory turnover efficiency declined through mid-2022, as evidenced by lower turnover ratios and extended processing periods. This phase was subsequently reversed, with turnover ratios improving and processing days decreasing, which could reflect enhanced operational efficiency, better demand forecasts, or adjustments in inventory management practices in the later periods examined.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates a fluctuating pattern over the analyzed periods, starting at 4.5 in March 2020 (with data available from March 2020 onwards). The ratio declined gradually to around 4.05 by September 2020 and remained relatively stable near this level through December 2020. From early 2021 to late 2022, the ratio fluctuated modestly between 3.94 and 4.31, indicating minor variation in efficiency of accounts receivable collection. In 2023 and into early 2024, the turnover ratio saw a slight upward trend, reaching a peak near 4.53 in March 2025, the highest value in the period observed. This overall suggests modest improvements in the company's ability to collect receivables more quickly in recent quarters, following a trough in 2020.

Average Receivable Collection Period

The average receivable collection period, expressed in number of days, inversely mirrors the receivables turnover ratio trends. Beginning at 81 days in early 2020, the collection period extended to approximately 90 days by mid-2020. It remained relatively steady in the high 80s to low 90s range during subsequent quarters through 2022, highlighting a consistent timeframe for receivables collection during this period. Notably, a slight improvement is seen from late 2023 to early 2025 as the collection period decreases from around 90 days to 81 days by March 2025. This shortening of the collection period corroborates the upward trend observed in the receivables turnover ratio, indicating enhanced efficiency in converting receivables into cash in the more recent quarters.

Overall Analysis

The data indicates that after a period of relative stability with slight deterioration in receivables management efficiency during 2020 and early 2021, the company has gradually improved its performance in managing receivables over the subsequent years. The improvement is modest but consistent, as evidenced by the increasing receivables turnover and the decreasing collection days towards the end of the period studied. These trends suggest better credit control or faster customer payments, which could positively impact the company’s cash flow management and working capital efficiency.

Average Inventory Processing Period

The average inventory processing period shows a general declining trend from March 31, 2021, through March 31, 2025. Beginning at 58 days in early 2021, the period increased to a peak of 70 days by September 30, 2022. After this peak, the duration steadily decreased to reach 55 days by March 31, 2025, with minor fluctuations in some quarters. This trend suggests improvements over time in inventory turnover and possibly more efficient inventory management practices following a period of longer processing times.

Average Receivable Collection Period

The average receivable collection period generally fluctuates between 81 and 93 days throughout the observed period. It started at 81 days in early 2021, increased to 93 days by March 31, 2023, indicating a temporary lengthening in the time taken to collect receivables. Afterward, the collection period trends downward with some variability and reaches 81 days again by March 31, 2025. The data demonstrates periods of both tightening and loosening in credit collection efficiency, with no clear long-term improvement or deterioration over the entire timeframe.

Operating Cycle

The operating cycle mirrors the combined effect of both inventory processing and receivable collection periods. Beginning at 139 days in early 2021, it peaked at 162 days by September 30, 2022, reflecting the simultaneous extension of inventory and receivables durations. Following this, a consistent decrease leads to 136 days by March 31, 2025, indicating an overall enhancement in working capital management. The operating cycle’s gradual reduction after its peak suggests improved coordination in inventory turnover and receivables collection, contributing positively to cash flow and operational efficiency.