Oracle Corporation (ORCL)

Short-term

Turnover ratios

The analysis of Oracle Corporation’s activity ratios over the specified periods reveals several noteworthy trends:

Inventory Turnover:
Data for inventory turnover is largely unavailable across most periods, with sporadic figures recorded only twice. In May 2021, the ratio was 55.32, rising to 28.27 in May 2022, then slightly increasing to 45.52 in May 2023, and further to 47.56 in May 2024. The variability and sparse data indicate that inventory management activities are not a primary focus for Oracle, likely due to the company's business model emphasizing software and services over tangible goods. The fluctuating turnover rates, with occasional spikes, suggest relative stability in inventory levels during the periods where data is available.

Receivables Turnover:
This ratio demonstrates consistency with minor fluctuations. The turnover hovered around 8.5 to 9.3 times, indicating that Oracle generally collects its accounts receivable approximately 8.5 to 9.3 times annually. The highest recorded turnover was 9.28 in November 2021, while the lowest was 6.71 in May 2024. The slight downward trend towards 2024 suggests marginally longer collection periods but overall reflects stable receivables management.

Payables Turnover:
There is notable variation in this ratio, with a decreasing trend from elevated levels during 2020-2021 towards lower values in recent periods. The ratio peaked at 14.72 in August 2020 and regained to 13.67 in August 2023 but shows a declining pattern reaching 3.31 by May 2025. Higher payables turnover indicates earlier settlement of payables, whereas decreasing figures imply extended payment periods, possibly reflecting strategic management of cash flow or supplier relationships.

Working Capital Turnover:
Data for this ratio is incomplete; however, available figures indicate significant fluctuations. The ratio increased markedly from 1.26 in August 2020 to a peak of 3.86 in February 2022, signaling improved efficiency in utilizing working capital during this interval. Later data points are unavailable for many periods, but the substantial jump to 113.15 in February 2025 suggests a significant enhancement in working capital utilization or a restructuring that impacted this ratio dramatically.

Overall Observations:
- The frequent absence or sporadic presentation of inventory turnover data underscores Oracle's operational focus on software, cloud services, and related intangible assets, with minimal emphasis on physical inventory management.
- Steady receivables turnover figures reflect effective credit policies and collection efficiency.
- Variability in payables turnover indicates flexible supplier payment strategies, possibly aligned with cash flow optimization.
- Fluctuations and eventual substantial increase in working capital turnover imply strategic shifts or operational improvements affecting resource utilization efficiency.

In conclusion, Oracle’s activity ratios suggest a business model centered on high receivables collections, flexible payables management, and limited inventory activity, with recent evidence pointing towards improving efficiency in working capital utilization.

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Average number of days

The activity ratios for Oracle Corporation, as reflected in the data, demonstrate notable trends across several key operational metrics, including days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables.

Starting with the Days of Inventory on Hand, data indicate periods where inventory hold periods are either not available or not reported (denoted by “— days”), interspersed with periods of measurable inventory days. Notably, in May 2021, DOH was approximately 6.60 days, suggesting efficient inventory management during this period. This figure increased to approximately 12.91 days in May 2022, indicating a potential slight build-up in inventory. By May 2023, inventory days decreased again to approximately 8.02 days, and further reduced to around 7.67 days in May 2024, demonstrating a trend toward more efficient inventory turnover in recent years. Periods lacking data make trend analysis challenging but the available figures suggest a relatively lean inventory profile, especially in recent periods.

In terms of Days of Sales Outstanding, the company shows a generally consistent receivables collection period. The DSO fluctuated between approximately 40.00 and 52.70 days over the observed periods. The lower range, around 40 days in August 2021 (40.06 days), reflects efficient receivables collection, whereas the higher DSO values, such as approximately 54.42 days in May 2025, indicate a slight elongation in collection periods over time. The consistent presence of DSOs in the mid to high 40s and low 50s suggests stable credit policies but with a slight trend towards lengthening collection periods.

Regarding Days of Payables, the data reveal considerable variation, with notable increases during certain periods. Early in the observation window, payables ranged approximately from 24.79 days (August 2020) to about 38.48 days (February 2021). By the end of the period, the payables period extended significantly, reaching approximately 110.26 days in May 2025, implying a strategic extension of payment terms or challenges in cash flow management. The fluctuating payable days reflect periodic changes in the company's trade credit policies or supplier negotiations.

In summary, Oracle's activity ratios indicate a pattern of maintaining relatively low inventory days, consistent receivables collection periods, and a trend toward lengthening payable periods over time. These ratios collectively suggest the company strives for operational efficiency in inventory and receivables management, while increasingly extending its payables, possibly to optimize cash flow and working capital management. The visible trends point to a focus on balancing operational liquidity with supplier relationships, with recent data indicating a strategic shift toward longer payment terms.

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See also:

Oracle Corporation Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The analysis of Oracle Corporation’s long-term activity ratios reveals insights into the company's asset utilization efficiency over the recent periods.

Fixed Asset Turnover Ratio:
This ratio measures how effectively fixed assets are employed to generate sales revenue. Between August 31, 2020, and November 30, 2023, there is a consistent declining trend, from 6.13 down to 2.87. This indicates that over this period, Oracle has experienced a steady decrease in sales generated per dollar of fixed assets. Such a decline could suggest that the company’s fixed assets have become less productive, possibly due to increased capital expenditure in asset-intensive areas, changes in product or service delivery models, or industry-specific factors affecting asset utilization. Despite this decline, the ratio remains positive, indicating that fixed assets still contribute to revenue generation, albeit less efficiently.

Total Asset Turnover Ratio:
This ratio evaluates the efficiency of the entire asset base in generating sales. From August 31, 2020, to May 31, 2023, the ratio steadily hovers around 0.35 to 0.39, reflecting relatively stable asset utilization. A slight upward or downward movement within this range suggests a modest variation in how effectively total assets are being deployed to generate sales, without significant shifts in overall efficiency. Post May 2023, the ratio stabilizes at approximately 0.37-0.38 through November 2023 onward, indicating a consistent utilization level of total assets.

Overall Observations:
The declining pattern in the fixed asset turnover suggests a possible shift in Oracle's operational focus, where investments in fixed assets are not translating into proportionate increases in sales, or asset utilization is becoming less efficient. Conversely, the total asset turnover remains relatively stable, implying that, overall, the company retains a consistent level of efficiency in utilizing its entire asset base despite the decreasing fixed asset efficiency. These trends may reflect strategic changes, shifts in business model, or external industry factors affecting asset productivity.

Conclusion:
Oracle’s long-term activity ratios point to a situation where fixed asset efficiency has diminished over the analyzed period, while the efficiency of the total asset base has remained relatively stable. Continuous monitoring of asset management strategies and operational efficiency is recommended to interpret future performance and inform strategic decisions.

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See also:

Oracle Corporation Long-term (Investment) Activity Ratios (Quarterly Data)