The document discusses three lessons that can be learned from Schlumberger's balance sheet about the company's size, liquidity, and solvency. It notes that Schlumberger is one of the largest companies in America based on metrics like total assets and revenue. It finds that Schlumberger's current ratio indicates liquidity within the normal range for large companies. And it determines that Schlumberger's debt-to-equity ratio shows it is solvent with debt lower than equity.

1. SCHLUMBERGER'S BALANCE SHEET
3 LESSONS FOR INVESTORS

2. SCHLUMBERGER'S BALANCE SHEET
CASTS LIGHT ON THREE OF THE
COMPANY'S MOST IMPORTANT
TRAITS.

3. SIZE | LIQUIDITY | SOLVENCY

4. ASSETS & EQUITY
ARE THERE ENOUGH CURRENT
ASSETS (CASH & EQUIVALENTS) TO
COVER CURRENT LIABILITIES?
DOES EQUITY EXCEED DEBT?
SIZE | LIQUIDITY | SOLVENCY

5. THESE TRAITS GIVE INVESTORS A
SENSE OF SCHLUMBERGER'S
GROWTH POTENTIAL, AS WELL AS OF
THE VULNERABILITY OF ITS
BUSINESS MODEL.

6. BEFORE DIGGING INTO THESE
TRAITS, LET’S BRIEFLY REVIEW THE
BALANCE SHEET ITSELF.

7. EQUITY
LIABILITIES
ASSETS
THE BALANCE SHEET
1. THE BALANCE SHEET
REVEALS A COMPANY’S
ASSETS, LIABILITIES,
AND OWNERS’ EQUITY
ON THE FINAL DAY OF A
FISCAL QUARTER OR
YEAR.
2. THIS IS WHY IT’S
OFTEN REFERRED TO AS
A SNAPSHOT OF A
COMPANY’S FINANCIAL
CONDITION.
3. THE “ACCOUNTING
EQUATION” HOLDS THAT
ASSETS MUST ALWAYS
EQUAL LIABILITIES PLUS
OWNERS’ EQUITY.

8. 1. SIZE

9. YOU PROBABLY WON'T BE
SURPRISED TO HEAR THAT
SCHLUMBERGER IS ONE OF THE
BIGGEST COMPANIES IN AMERICA.

10. $90 billion
$63 billion
$38 billion $41 billion
Market
Capitalization
Total
Assets
Shareholders'
Equity
Revenue
(ttm)
4 WAYS TO MEASURE SCHLUMBERGER'S SIZE
FOUND ON SCHLUMBERGER'S BALANCE SHEET

11. 39TH86TH SCHLUMBERGER IS THE 39TH
BIGGEST COMPANY ON THE
S&P 500 BASED ON EQUITY.
IT'S THE 86TH LARGEST WHEN
MEASURED BY ASSETS.

12. THANKS TO SCHLUMBERGER'S
ALREADY CONSIDERABLE SIZE, IT
ISN'T LIKELY TO GROW AS FAST AS,
SAY, A NEWLY LISTED GROWTH
STOCK.

13. 2. LIQUIDITY

14. THE CURRENT RATIO IS A COMMON WAY
TO MEASURE LIQUIDITY.

15. IT’S CALCULATED BY DIVIDING A
COMPANY’S CURRENT ASSETS BY ITS
CURRENT LIABILITIES.

16. $22 BILLION
$14 BILLION
= 1.54
SCHLUMBERGER'S
CURRENT ASSETS
SCHLUMBERGER'S
CURRENT LIABILITIES
SCHLUMBERGER'S
CURRENT RATIO

17. HOW DOES SCHLUMBERGER'S
CURRENT RATIO COMPARE TO THAT
OF OTHER LARGE-CAP STOCKS?

18. -
1
2
3
4
5
6
← 100 BIGGEST S&P 500 COMPANIES →
←CURRENTRATIO→
54% OF S&P 500 COMPANIES
HAVE CURRENT RATIOS
BETWEEN 0.75 AND 2.0
THE CURRENT RATIOS OF THE 100
BIGGEST S&P 500 COMPANIES

19. BY THIS MEASURE, THEN,
SCHLUMBERGER'S LIQUIDITY IS
WITHIN THE USUAL RANGE, FALLING
BETWEEN 0.75 AND 2.0.

20. 3. SOLVENCY

21. LAST BUT NOT LEAST IS SOLVENCY,
WHICH IS MEASURED BY THE DEBT-TO-
EQUITY RATIO.

22. THIS IS CALCULATED BY DIVIDING A
COMPANY’S DEBT BY ITS EQUITY.

23. $12 BILLION
$38 BILLION
= 0.32
SCHLUMBERGER'S
DEBT
SCHLUMBERGER'S
EQUITY
SCHLUMBERGER'S
DEBT-TO-EQUITY
RATIO

24. THERE’S NO HARD-AND-FAST RULE
WHEN IT COMES TO THE DEBT-TO-
EQUITY RATIO, THOUGH A SMALLER
RATIO (LESS THAN 1) IMPLIES THAT A
COMPANY IS BETTER POSITIONED TO
SURVIVE AN INTERUPTION TO ITS
REVENUE.

25. HOW DOES SCHLUMBERGER'S DEBT-
TO-EQUITY RATIO COMPARE?
2.98
2.17
0.74
0.49
0.28 0.20 0.32
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
IBM MCD AA PG JNJ XOM SLB

26. BECAUSE SCHLUMBERGER'S DEBT-
TO-EQUITY RATIO IS LESS THAN OR
EQUAL TO 1.0, IT'S SAFE TO SAY THE
COMPANY IS SOLVENT.

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