Seagate Technology PLC (STX)

Short-term

Turnover ratios

The activity ratios of Seagate Technology PLC reveal significant insights into the company's operational efficiency over the period from September 2020 through June 2025. The analysis focuses on inventory turnover, receivables turnover, payables turnover, and working capital turnover.

Inventory Turnover:
The inventory turnover ratio demonstrates a general downward trend following a peak of 6.91 in September 2021. Initially, the ratio increased from approximately 5.65 in September 2020 to 6.91 in September 2021, indicating an improvement in inventory management and faster sales of stock during this period. Subsequently, the ratio declines, reaching approximately 3.73 by September 2024 and slightly rising again to 4.10 in June 2025. This decline suggests a slowdown in inventory turnover, potentially reflecting increased inventory levels or sluggish sales in recent years.

Receivables Turnover:
Receivables turnover has exhibited considerable variability. It increased markedly from 11.83 in September 2020 to a peak of 13.71 in March 2024, indicating an improvement in collection efficiency over time. Intermittent declines are observed, with some fluctuations, notably a dip to 8.46 in March 2023. Overall, the trend supports a trajectory of enhanced receivables management, especially evident in the periods after mid-2023. The ratio peaked again at 13.73 in March 2025, implying that the company is effective at collecting receivables relative to sales.

Payables Turnover:
The payables turnover ratio shows variability, generally indicating changes in the company's payment practices. It fluctuated between 4.17 and 4.66 until late 2021, then experienced a notable increase reaching 6.51 in December 2022, before declining again to approximately 3.30 in December 2023 and around 3.68 by June 2025. The increase during 2022 suggests the company was delaying payments to suppliers, potentially optimizing cash flow. The subsequent decrease indicates more prompt payments in recent periods.

Working Capital Turnover:
This ratio exhibits marked variability, reflecting significant shifts in working capital management efficiency. It surged notably to a peak of 65.36 in December 2023, suggesting rapid sales relative to working capital invested, and substantial operational efficiency at that time. However, the ratio exhibits volatility, declining to 9.05 by June 2025, which may imply increased working capital levels or decreased sales efficiency. The high fluctuation indicates dynamic management strategies concerning working capital utilization, with periods of intense efficiency followed by more conservative phases.

Overall Summary:
From the data, Seagate’s inventory management has become relatively less aggressive post-2021, with declining inventory turnover ratios. Receivables collection has generally improved, especially in recent years, implying better credit control. The payables turnover ratio suggests strategic delays in payments during 2022, sent to optimize cash flow, but has in recent periods moved towards more typical payment practices. The working capital turnover shows periods of exceptional efficiency, notably in late 2023, but overall remains highly volatile, indicating fluctuating operational strategies or seasonal impacts. These activity ratios collectively reflect a company adjusting its operational practices, balancing inventory and receivables management with working capital utilization to optimize cash flow and operational performance.

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Average number of days

The analysis of Seagate Technology PLC’s activity ratios, based on the provided data, reveals notable trends and fluctuations over the period from September 2020 through June 2025.

Days of Inventory on Hand (DOH):
The inventory holding period shows a general upward trend. Starting at approximately 64.58 days in September 2020, the DOH fluctuated slightly but maintained stability around the mid-60s through 2021. A significant increase occurs from March 2022 onward, reaching 69.73 days in June 2022, and rising further to a peak of around 98.04 days by December 2024. The continued elongation of inventory days suggests a possible slowdown in inventory turnover or strategic buildup of stock levels, potentially due to supply chain considerations or inventory management policies. The increase from around 56.60 days in June 2021 to nearly 98 days in December 2024 illustrates a clear shift towards holding inventories longer.

Days of Sales Outstanding (DSO):
The receivables collection period has experienced greater variability. During 2020 to early 2022, DSO fluctuated roughly between 28.74 days and 43.14 days, indicating a relatively stable collection period. From mid-2022 onward, DSO exhibited a declining trend, reaching as low as 26.58 days in March 2024, indicating more efficient receivables management during this period. However, the DSO increased again slightly towards September 2024, reaching 37.83 days before stabilizing around 26.58 to 33.48 days again in early 2025. The overall trend suggests improved receivables collection efficiency from mid-2022 to early 2024, followed by modest fluctuations.

Number of Days of Payables:
The payables period has shown considerable variation over the analyzed timeframe. Initially, the payables days hovered around 87.61 days in September 2020, with periods of fluctuation. A notable decline occurs by December 2022 to approximately 56.10 days, implying faster payment of suppliers. However, from 2023 onward, the number of days payable increases sharply, reaching a peak of approximately 129.99 days in June 2024, before decreasing somewhat to about 94.70 days in March 2025. The upward trend from 2022 through mid-2024 may indicate extended payment terms or delayed payments, possibly reflecting changes in vendor relationships, cash flow management strategies, or strategic leverage.

Overall Pattern and Insights:
- There is a marked increase in inventory days from late 2021 onward, indicating a shift towards holding more inventory, potentially due to supply chain disruptions or strategic inventory accumulation.
- The DSO shows improvement in receivables management during 2022 to early 2024, implying enhanced collection processes or tighter credit policies.
- The payables cycle exhibits considerable fluctuation, with an overall trend towards extending payment periods during 2023 and mid-2024, which could suggest strategic delaying of payables to conserve cash or negotiate better terms with suppliers.

In conclusion, Seagate’s activity ratios reflect evolving operational strategies over the period, with increased inventory holding, a trend towards faster receivables collection, and a tendency to extend payables. These movements may be responses to broader industry conditions, supply chain dynamics, or internal policy adjustments impacting working capital management.

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Long-term

The analysis of Seagate Technology PLC's long-term activity ratios over the observed period reveals noteworthy trends in asset utilization efficiency.

The Fixed Asset Turnover ratio, which measures how effectively the company utilizes its fixed assets to generate sales, displays intermittent data with some periods lacking available figures. When available, from December 31, 2020, through September 30, 2023, the ratio shows an initial rise from 4.69 to a peak of 5.48 in March 2022, indicating improved efficiency in deploying fixed assets to generate revenue. Subsequently, the ratio exhibits a declining trend, declining to 4.12 by September 2023. This decline suggests a reduction in fixed asset utilization efficiency, which may be attributable to increased capital expenditure, asset base expansion, or operational restructuring that temporarily dampen asset productivity.

The Total Asset Turnover ratio demonstrates a more continuous pattern, beginning at 1.16 as of September 30, 2020. The ratio generally increased during 2020 and early 2021, reaching a high of 1.33 in September 2021, reflecting enhanced overall asset efficiency. Post-September 2021, the ratio consistently declines, falling to approximately 0.85 by June 2024, indicating a decrease in the company's effectiveness in generating sales from its total assets. Interestingly, there is a moderate recovery observed in the latter part of 2024 and into 2025, with the ratio returning to around 1.13, suggesting an improvement in asset utilization efficiency.

Overall, these ratios reflect a pattern of initial improvements in asset utilization, followed by periods of decline and subsequent partial recovery. The fluctuations in fixed asset turnover indicate that efficiency in fixed asset deployment has been challenged during recent periods, potentially due to asset expansion, technological investments, or shifts in operational strategies. Meanwhile, the total asset turnover data suggest a longer-term trend toward reduced overall asset efficiency, with some signs of stabilization or slight improvement toward the most recent periods.