Seagate Technology PLC (STX)

Short-term

Turnover ratios

The activity ratios of Seagate Technology PLC, as presented in the provided data, exhibit notable trends and fluctuations over the examined periods, reflecting changes in inventory management, receivables collection efficacy, payables management, and overall working capital utilization.

Inventory Turnover:
This ratio indicates how effectively the company manages its inventory levels, with a higher ratio denoting quicker inventory turnover. From June 2020 to March 2021, there was a slight decline from 6.71 to 5.84, signaling a gradual slowdown in inventory movement. Subsequently, the ratio exhibited variability, peaking at 6.91 in September 2021 before generally declining thereafter, reaching a low point of approximately 3.72 in December 2024. The downward trend suggests an increasing accumulation of inventory or slower sales cycles, which could point to excess inventory or changing product demand dynamics.

Receivables Turnover:
This metric measures the efficiency of receivables collection. An upward trend is observed from June 2020 (9.43) through September 2020 (11.83) and then to December 2020 (12.70). After a slight dip in March 2021, the ratio generally fluctuates, with notable peaks at 13.71 in March 2024 and 13.73 in March 2025, indicating an improvement in collection efficiency over the period. The variability within this range may reflect strategic shifts in credit policies or customer payment behaviors, with recent data pointing towards more efficient receivables management.

Payables Turnover:
This ratio reveals how swiftly the company pays its suppliers. The data shows a declining trend from 4.24 in June 2020 to approximately 3.30 in December 2023, implying an extension of payment periods to suppliers over time. Notably, a brief spike to 6.51 in December 2022 indicates a temporary increase in payment frequency, but overall, the trend suggests increased leverage in supply chain payments, possibly as a means to conserve cash.

Working Capital Turnover:
This ratio assesses how effectively the company uses working capital to generate sales. The data shows considerable volatility, with high points at 41.74 in September 2023 and 65.36 in December 2023. These peaks suggest periods where the company was able to generate significant sales relative to its working capital investments. However, the ratios fluctuate substantially, with the data points after December 2023 indicating a downward trend towards more conservative working capital utilization. The fluctuations reflect periods of operational efficiency and possible over extension periods, combined with cautious management in later periods.

Overall Observations:
The activity ratios collectively suggest a company periodically adjusting its operational strategies. The declining inventory turnover ratios may point to increased inventory levels or slower sales. The rising receivables turnover indicates an improvement in collection practices, whereas decreasing payables turnover ratios point to extended credit terms with suppliers, emphasizing a shift towards more working capital flexibility. The substantial swings in working capital turnover ratios reflect varying operational efficiencies and strategic emphasis on sales generation relative to working capital investment. Such trends should be monitored for signs of operational efficiency or potential liquidity and inventory management issues.

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Average number of days

The analysis of Seagate Technology PLC's activity ratios, based on the provided data, reveals several notable trends across inventory management, receivables collection, and payables deferment over the period from June 2020 through March 2025.

Days of Inventory on Hand (DOH):
The DOH metric exhibits a general upward trend with fluctuations, indicating an overall increase in the average number of days inventory remains on hand. Starting at approximately 54.37 days in June 2020, there is a steady rise reaching nearly 98.04 days by December 2024. Notably, the most significant increases occur post-September 2022, where inventory days escalate sharply from around 77.27 days to nearly 98 days, suggesting a buildup of inventory or longer inventory cycle times. The elevated levels persisted through early 2025, with March levels approaching approximately 95 days, potentially reflecting changes in production, supply chain disruptions, or shifts in demand.

Days of Sales Outstanding (DSO):
The DSO figures display a mixed pattern with periods of decline and increases. Initially, DSO decreases from 38.73 days in June 2020 to a low of roughly 28.74 days at year-end 2020, indicating improved receivables collection efficiency during that period. Subsequently, DSO trends upward, peaking at about 47.95 days in June 2022 before declining again to around 26.58 days in March 2025. The variation suggests phases of more efficient receivables management, particularly from late 2022 through early 2025, where collection periods have shortened to roughly 27 days, reflecting improved cash flow management or changes in credit policy.

Number of Days of Payables:
The payables duration demonstrates an overall lengthening trend over time. Initially, payables are maintained around 86 to 87 days from June to September 2020. Over the subsequent periods, the number increases, surpassing 100 days in late 2023 and early 2024, with peaks approaching approximately 129 to 121 days. This increases the period the company takes to settle its obligations, possibly indicating extended credit terms negotiated with suppliers or strategic delaying to optimize working capital. Notably, after reaching these peaks, the payable days somewhat decline to around 94.70 days by March 2025, but still remain elevated compared to the initial levels.

Summary of Trends and Implications:
- The rising inventory days suggest a lengthening of inventory holding periods, which could be due to supply chain inefficiencies, increased production buffers, or strategic inventory accumulation.
- The fluctuating but generally decreasing DSO from mid-2022 onward indicates an improvement in receivables management, potentially reflecting stricter credit controls or faster collection processes.
- The elongation of days payable, especially during 2023 and early 2024, points towards extended payment terms with suppliers, which may be a strategic move to manage liquidity or an effect of supplier negotiations.

Overall, Seagate's activity ratios imply a transition towards longer inventory and payables cycles, coupled with improvements in receivables collection efficiency in recent periods. These patterns are indicative of evolving working capital management strategies, possibly influenced by supply chain dynamics, credit policies, and market conditions during the analyzed timeframe.

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Long-term

The analysis of Seagate Technology PLC’s long-term activity ratios reveals notable trends over the observed periods, indicating changes in asset efficiency and utilization.

Fixed Asset Turnover Ratio:
This ratio measures how effectively the company utilizes its fixed assets to generate sales. From June 2020 to March 2024, the fixed asset turnover exhibited fluctuations within a relatively narrow range, with values oscillating between 4.12 and 5.48. The highest recorded value, 5.48, appears in March 2022, suggesting peak efficiency during this time, while the lowest, 4.12, occurs in September 2023, indicating a decline in fixed asset utilization. The data points for September 2020 and December 2023 are missing, likely due to reporting gaps or data unavailability. Overall, despite variations, the ratios indicate that Seagate’s fixed asset utilization has remained relatively stable with a slight downward trend in recent periods.

Total Asset Turnover Ratio:
This ratio assesses overall efficiency by measuring sales generated from total assets. Compared to fixed asset turnover, the total asset turnover shows a clear declining trend over the analyzed period. It started at approximately 1.18 in June 2020, peaked at 1.33 in September 2021, then gradually declined to around 0.91 by December 2023. Interestingly, there is a slight recovery observed in the most recent quarters, with values reaching approximately 1.01 in December 2024 and 1.13 in March 2025, although these are outside the initial forecast period. This pattern suggests a general decrease in overall asset efficiency over time, possibly reflecting increased asset base or decreased sales relative to asset size, with recent signs of stabilization or recovery.

Overall Interpretation:
The long-term activity ratios portray a company with relatively stable fixed asset utilization but diminishing overall asset efficiency over the period analyzed. The declining trend in total asset turnover indicates that Seagate might be experiencing challenges in generating proportionate sales from its total assets, which could be attributable to factors such as market saturation, investments in new assets not yet fully realized in sales, or operational considerations. The stabilization or slight recovery in the latest figures suggests potential adjustments or strategic shifts to improve efficiency.

This comprehensive review underscores the importance of monitoring both ratios to assess assets’ fundamental performance and identify areas potentially requiring strategic management or operational improvement.