SLB N.V. (NYSE:SLB)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the company demonstrates increasing efficiency in inventory management, while receivables collection shows more fluctuation. Working capital turnover displays significant quarterly variability. A closer examination of individual ratios reveals specific patterns.

Inventory Turnover

Inventory turnover generally increased from 5.32 in March 2022 to a peak of 6.59 in December 2024. A slight decrease to 6.17 was noted in March 2025, followed by a recovery to 5.80 in June 2025, and a further decline to 5.36 in September 2025 before a final increase to 5.80 in December 2025. This suggests improving efficiency in managing inventory levels, with a potential slight weakening in the most recent quarter.

Receivables Turnover

Receivables turnover remained relatively stable between 3.94 and 4.24 for most of the period, with some quarterly fluctuations. A noticeable increase occurred from 3.87 in September 2025 to 4.11 in December 2025, indicating a faster conversion of receivables into cash in the latter part of the period. Overall, the trend is relatively flat, suggesting consistent, but not dramatically improving, collection practices.

Working Capital Turnover

Working capital turnover demonstrates the most significant variability. It experienced a substantial decline from 9.26 in March 2022 to 6.65 in June 2022, followed by a recovery to 9.41 in December 2022. Subsequent quarters show continued fluctuations, reaching a low of 5.75 in March 2024 and a high of 10.14 in March 2025. The ratio settled at 7.45 in December 2025. This suggests inconsistent utilization of working capital, potentially influenced by seasonal factors or strategic shifts in operations.

Average Inventory Processing Period

The average inventory processing period generally decreased from 69 days in March 2022 to 55 days in December 2024, aligning with the increasing inventory turnover. A slight increase to 59 days was observed in March 2025, followed by a rise to 68 days in September 2025, before decreasing to 63 days in December 2025. This indicates a shortening of the time required to convert inventory into finished goods and ultimately, sales, with a recent reversal of that trend.

Average Receivable Collection Period

The average receivable collection period fluctuated between 86 and 94 days throughout the period. A decreasing trend is observed from 94 days in September 2025 to 89 days in December 2025, corresponding with the increase in receivables turnover. The period remained relatively high, suggesting potential inefficiencies in collecting payments from customers.

Operating Cycle

The operating cycle generally decreased from 157 days in March 2022 to 136 days in December 2024, reflecting improvements in both inventory management and receivables collection. An increase to 162 days was noted in September 2025, followed by a decrease to 152 days in December 2025. The overall trend indicates a shortening of the time required to convert raw materials into cash, although recent fluctuations suggest potential challenges in maintaining this efficiency.

In summary, the company demonstrates improving efficiency in inventory management and a generally shortening operating cycle. However, receivables collection remains relatively stable and the working capital turnover exhibits significant variability, indicating potential areas for further investigation and improvement.

Inventory turnover exhibited a generally increasing trend over the observed period, with some fluctuations. Initial values ranged from 5.19 to 5.32 in the first four quarters of the analyzed timeframe. A subsequent increase was noted, peaking at 6.59 before experiencing a slight decline and then stabilizing.

Overall Trend

The inventory turnover ratio generally increased from March 31, 2022, through December 31, 2022, indicating a more efficient use of inventory. This trend continued into 2023, reaching its highest point in December 2023. A slight decrease occurred in the first half of 2024, followed by a rebound and stabilization in the latter half of the period.

Short-Term Fluctuations

A minor dip in inventory turnover was observed between March 31, 2022, and June 30, 2022. Following this, the ratio increased consistently through the end of 2023. A more noticeable decrease occurred between December 31, 2023, and September 30, 2024, before recovering slightly in the final quarters.

Recent Performance

The most recent quarters show a stabilization of the inventory turnover ratio around 5.80 to 6.28. While still elevated compared to the initial periods, the rate of increase has slowed. The ratio decreased to 5.36 in September 2025, before recovering to 5.80 in December 2025.

Relationship to Cost of Revenue

Cost of revenue consistently increased throughout the period. The concurrent increase in inventory turnover suggests that the growth in sales effectively managed the rising costs, preventing a significant buildup of inventory. However, the slight decrease in turnover in late 2024 and early 2025, despite continued cost of revenue growth, warrants further investigation.

Relationship to Inventory Levels

Inventory levels generally increased over the period, but at a slower rate than the cost of revenue. This difference in growth rates contributed to the overall increase in inventory turnover. The slight decrease in turnover in September 2025 coincided with a peak in inventory levels, suggesting a potential correlation.

The receivables turnover ratio exhibited a generally stable pattern over the observed period, with some fluctuations. Initially, the ratio decreased from 4.14 in March 2022 to 3.97 in June 2022, remaining relatively consistent through September 2022 at 3.98 and December 2022 at 3.99. A slight dip to 3.94 was noted in March 2023, followed by a modest increase to 4.06 in June 2022. The ratio then decreased slightly to 3.98 in September 2023 before rising to 4.24 in December 2023.

Trend Analysis - 2023/2024

The ratio remained relatively stable in the first half of 2024, fluctuating between 4.15 and 4.08. A noticeable increase occurred in the third quarter of 2024, reaching 4.36, and continued into December 2024 with a value of 4.53. This represents the highest point in the observed period. A subsequent decrease was observed in the first half of 2025, falling to 4.19 and 4.13 respectively.

The latter half of 2025 showed a further decline, with the ratio decreasing to 3.87 in September 2025. A slight recovery was seen in December 2025, with the ratio reaching 4.11. Overall, the ratio demonstrates a cyclical pattern, with periods of stability punctuated by increases and decreases. The most significant increase occurred between September 2023 and December 2024.

Long-Term Observations

Despite the fluctuations, the receivables turnover ratio generally remained within a narrow range of approximately 3.87 to 4.53 throughout the analyzed timeframe. This suggests a consistent efficiency in collecting receivables, although the recent decline in September 2025 warrants further investigation.

The observed changes in the receivables turnover ratio appear to correlate with fluctuations in revenue, though a detailed correlation analysis would be required to confirm this relationship. The increase in the ratio during the latter part of 2024 may indicate improved collection processes or a shift in customer payment terms.

The working capital turnover ratio exhibits fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values indicate a relatively high turnover, followed by periods of decline and subsequent recovery. A general observation suggests a cyclical pattern in the ratio’s performance.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio begins at 9.26 and decreases to 6.65 before rising again to 9.41. This initial period demonstrates considerable volatility, potentially reflecting changes in the level of working capital relative to revenue. The increase in the final quarter of 2022 suggests improved efficiency in utilizing working capital to generate sales.

2023 Performance

The year 2023 shows a generally decreasing trend in the working capital turnover ratio. Starting at 9.49, the ratio declines to 7.82, 7.10, and 7.66. This suggests a potential slowdown in the efficiency of working capital utilization throughout the year, despite increasing revenue. The slight recovery in the final quarter of 2023 may indicate a stabilization of this trend.

2024 and Early 2025

The ratio continues to decline in 2024, reaching a low of 5.75. This is followed by an increase to 10.14 in the first quarter of 2025, representing the highest value in the observed period. Subsequent quarters in 2025 show a decrease to 8.03, 6.49, and finally 7.45. The significant jump in the first quarter of 2025 warrants further investigation, as it deviates substantially from the preceding trend. The subsequent decline suggests this may have been a temporary anomaly.

Overall, the working capital turnover ratio demonstrates a lack of consistent directional movement. While there are periods of improvement, the ratio generally trends downwards from 2022 to 2024, with a notable, but potentially temporary, spike in early 2025. The fluctuations suggest that the relationship between working capital and revenue is dynamic and influenced by various factors. Further analysis, incorporating industry benchmarks and internal operational changes, would be necessary to fully understand these trends.

The average inventory processing period demonstrates a generally decreasing trend over the observed period, with some fluctuations. Initially, the period remained relatively stable before exhibiting a more pronounced decline, followed by a recent increase.

Overall Trend

From March 31, 2022, through December 31, 2023, the average inventory processing period decreased from 69 days to 60 days. This indicates an improvement in inventory management efficiency, with the company taking less time to convert inventory into sales. However, from December 31, 2023, to September 30, 2025, the period increased to 68 days, suggesting a potential slowdown in the inventory conversion cycle.

Initial Stability (Q1 2022 - Q4 2022)

For the first three quarters of 2022, the average inventory processing period fluctuated between 69 and 70 days, showing minimal change. A slight decrease to 64 days was observed in the final quarter of 2022, potentially due to increased sales or inventory reduction strategies.

Accelerated Improvement (Q1 2023 - Q4 2023)

The period continued to decline in 2023, reaching a low of 60 days by the end of the year. This suggests successful implementation of inventory management improvements throughout the year, possibly including optimized supply chain processes or increased demand for products. The decline was gradual but consistent.

Recent Increase (Q1 2024 - Q3 2025)

Beginning in March 2024, the average inventory processing period began to increase, reaching 68 days by September 2025. This increase warrants further investigation to determine the underlying causes, which could include slowing sales, increased inventory levels, or disruptions in the supply chain. The period decreased slightly to 63 days by December 31, 2025, but remains elevated compared to the lows observed in 2023.

The fluctuations in the average inventory processing period suggest that external factors or internal operational changes are influencing the company’s ability to efficiently manage its inventory. Continued monitoring of this metric is recommended to identify and address any potential issues affecting inventory turnover and overall financial performance.

The average receivable collection period exhibited relative stability over the observed period, with fluctuations primarily occurring within a narrow range. An initial increase is noted from March 2022 through June 2022, followed by a period of consistency and then a notable decrease towards the end of 2022. This pattern continues into 2023 and 2024, with some quarterly variations, before showing a slight increase in late 2025.

Overall Trend

The collection period generally remained between 81 and 94 days throughout the analyzed timeframe. While there isn't a strong directional trend, a slight tendency towards shorter collection periods is observable in the latter half of the period, particularly in 2023 and early 2024.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The average collection period began at 88 days in March 2022, increasing to 92 days by June 2022. It remained at 92 days in September 2022 before decreasing to 91 days by the end of the year. This suggests a potential initial slowing in collections followed by a modest recovery.

Subsequent Period (Mar 31, 2023 – Dec 31, 2025)

From March 2023 through December 2024, the collection period fluctuated, reaching a low of 81 days in December 2024. A slight increase to 94 days was observed in September 2025, before decreasing again to 89 days by the end of 2025. This indicates continued operational adjustments impacting the timing of cash receipts.

Notable Observations

The most significant decrease in the average collection period occurred between September 2022 and December 2022, dropping from 92 days to 86 days. The lowest point in the period was observed in December 2024, at 81 days. The highest point was observed in June 2022 and September 2025, at 92 and 94 days respectively.

These fluctuations in the average receivable collection period may warrant further investigation to determine the underlying causes, such as changes in credit policies, customer payment behavior, or collection efforts. The overall stability suggests effective management of receivables, despite the observed variations.

The operating cycle, along with its component parts, exhibits discernible trends over the observed period. Generally, there is a tendency towards shortening of the operating cycle, though fluctuations occur. The average inventory processing period and average receivable collection period are key drivers of this overall trend.

Average Inventory Processing Period

The average inventory processing period demonstrates a generally decreasing trend, moving from 69 days in March 2022 to a low of 55 days in December 2024. A slight increase is noted in the first half of 2025, reaching 61 days in March and 68 days in September, before decreasing again to 63 days by December 2025. This suggests improving efficiency in managing inventory, though recent quarters indicate potential challenges or seasonal effects impacting inventory turnover.

Average Receivable Collection Period

The average receivable collection period fluctuates more significantly than the inventory processing period. It begins at 88 days in March 2022, peaks at 93 days in March 2023, and then generally declines to 81 days by December 2024. The period then increases to 87 days in March 2025, 94 days in September 2025, and concludes at 89 days in December 2025. These variations could be attributed to changes in credit policies, customer payment behavior, or the mix of sales terms offered.

Operating Cycle

The operating cycle follows the combined influence of its components. Starting at 157 days in March 2022, it reaches a high of 162 days in June 2022. A general downward trend is then observed, reaching a low of 136 days in December 2024. The operating cycle increases to 146 days in March 2025, 162 days in September 2025, and then decreases to 152 days in December 2025. The recent increases in both inventory processing and receivable collection periods contribute to the lengthening of the operating cycle in the latter part of the observed period. The overall trend suggests improved efficiency in converting investments in inventory and receivables into cash, but recent fluctuations warrant further investigation.

In summary, while the overall trend indicates a more efficient operating cycle, recent quarterly results suggest potential headwinds. Monitoring these ratios closely will be crucial to understanding the underlying causes of these fluctuations and their impact on overall financial performance.