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Prepared by Ksenia Udovitskaya and HSE MIB students
Solving challenges
HALLIBURTON WORLDWIDE
• One of the world's largest oil field services & equipment companies
• Provides technical products and services for petroleum and natural gas exploration and production
• Has dual headquarters located in Houston and in Dubai
• Operations in more than 80 countries
• Employs approximately70,000 people
• Chairman and CEO David Lesar
BALANCE SHEET (ASSETS)
BALANCE SHEET (LIABILITIES)
INCOME STATEMENTS
STATEMENTS OF CASH FLOWS (1)
STATEMENTS OF CASH FLOWS (2)
RATIO ANALYSIS
PROFITABILITY RATIO (1)
Net profit Margin (Net income/Sales): 7.2% (2013) Vs. 10.6% (2014)
Higher the ratio, higher will be the firm’s ability to pay its taxes. In the year 2013, the margin was low but in 2014 the margin increases by 3,4%.
Gross Profit Margin (Gross Profit/Sales): 21.7% (2013) Vs. 22.3% (2014)
This metric reveals the proportion of money left over from revenues after accounting for the cost of goods sold. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and build for the future. It is a good indication of financial health.Indexes show that company's gross profit margin is stable. There is not fluctuating from 2013 to 2014.
PROFITABILITY RATIO (2)• Operating Profit Margin (EBIT/Sales Revenue) =
10.7% (2013) vs 15.5% (2014)
PROFITABILITY RATIO (3)• Return on Assets (ROA) (Net income/Total assets) = 7.28%
(2013) vs 10.8% (2014)
Increase in Return of assets indicates that the company is generating more profits from all of its recourses compared to last year.
• Return on Equity (ROE) (Net profit (Net Income)/Shareholders Equity) = 15.6% vs 21.4%
• ROCE (Return on Capital Employed) (Profit before Tax/Capital employed) = Operating Profit Margin*Asset Turnover = 12.8% (2013) vs 19.3% (2014)
Efficient use of capital increased in 6.5% compared to last year. This means that company started to use capital more efficient and generate shareholder value.
OPERATIONAL EFFICIENCY RATIOS• Operating Expense Ratio (Operating Expenses/Total
Revenue) = 10.9% (2013) vs 6.7% (2014)
The figures indicating operating expenses dropped dramatically in 2014 year. The ratio, comparing expenses to revenue, shows that less ability to turn sales of company into cash.
• Total Asset Turnover (Revenue/Average Total Assets) = 100.6 (2013) vs 101.9% (2014)
These figures show how efficiently business generates sales on each dollar of assets. An increasing ratio indicates company uses its assets more productively.
LIQUIDITY RATIOS
• Working capital ratio (also known as Current Ratio) = (Current assets/Current liabilities) = 2.73 (2013) vs 2.56 (2014)
In 2013, the firm’s ability to cover its current liabilities with its current assets was higher than in 2014. Today company has less ability of firm to pay its bills. Halliburton is not improving their liquidity and efficiency, because their current ratio is not improving.
DEEPWATER HORIZON EXPLOSION
LIQUIDITY RATIO• Quick Ratio (Cash +AR + Marketable
Securities)/Current Liabilities = 2.07 (2013) vs 1.95 (2014)
COMPARISON WITH COMPETITORSQuick Ratio
LEVERAGE RATIO• Debt-to-equity (Short Term Debt + Long Term
Debt/Total Equity) = 1.15 (2013) Vs. 0.98 (2014)
• Debt ratio (Total Debt/Total Assets): 43.9% (2013) Vs. 42.5% (2014)
Financial leverage ratio compares capital invested by owners/funders (including grants) and funds provided by lenders.The indexes show that company became more stable to handle its long term and short term obligations during this period.
