Seagate Technology PLC (STX)

The liquidity ratios of Seagate Technology PLC over the periods from June 30, 2021, to June 30, 2024, reveal trends in the company's ability to meet its short-term obligations.

Current Ratio: The current ratio illustrates a gradual decline from 1.29 in 2021 to 1.13 in 2022 and further to 1.12 in 2023, followed by a slight decrease to 1.08 in 2024. This indicates a modest reduction in the company's overall liquidity position, suggesting that current assets relative to current liabilities have become slightly less ample over this period. Despite the decline, the current ratio remains above 1.0, implying that Seagate retained sufficient short-term assets to cover its liabilities.

Quick Ratio: The quick ratio, which excludes inventories and other less liquid assets, shows a more pronounced decrease from 0.81 in 2021 to 0.60 in 2022 and further down to 0.54 in 2023. It experiences a slight improvement in 2024 to 0.61. This pattern indicates that the company's capacity to settle short-term liabilities with the most liquid assets has weakened over time, although the recovery in 2024 suggests a slight enhancement in liquidity quality.

Cash Ratio: The cash ratio demonstrates variability, declining sharply from 0.41 in 2021 to 0.17 in 2022, then rising to 0.30 in 2023 and further to 0.44 in 2024. This movement reflects fluctuations in cash holdings relative to current liabilities, with a notable dip in 2022 followed by a recovery, indicating a temporary tightening of liquid cash reserves before improving in subsequent years.

Overall, the data depicts a trend of gradually diminishing liquidity margins over the analyzed period, with the ratios remaining above critical thresholds that suggest the company maintains sufficient liquidity to meet short-term obligations, albeit with decreasing buffers. The improvement in the cash ratio in 2023 and 2024 hints at some strategic adjustments or operational improvements in liquid asset management. However, the consistent decline in the current and quick ratios warrants continued monitoring to ensure liquidity remains adequate relative to operational needs.

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Additional liquidity measure

The analysis of Seagate Technology PLC's cash conversion cycle (CCC) over the period from June 30, 2021, to June 30, 2025, indicates significant fluctuations, reflecting evolving operational efficiency and liquidity management.

In fiscal year ending June 30, 2021, the CCC was approximately 15.08 days. This suggests that, on average, Seagate took about 15 days to convert inventory and receivables into cash after accounting for payables, indicating a moderate level of operational liquidity management.

By June 30, 2022, the CCC increased markedly to approximately 25.99 days. This expansion implies an elongation in the time taken to convert investments into cash, potentially due to extended inventory holding periods, longer receivable collection cycles, or a combination thereof. Such an increase could signal either strategic inventory buildup or changes in receivables collection practices.

The subsequent year, ending June 30, 2023, saw a substantial reduction in the CCC to approximately 2.69 days. This narrowing suggests a significant improvement in operational efficiency, with Seagate performing faster in converting its inventory and receivables into cash relative to its payables. It might reflect optimized inventory management or more effective receivables collection.

In the following year, June 30, 2024, the CCC turns negative at approximately -9.78 days. A negative CCC indicates that the company is able to settle its payables well before receiving cash from sales, effectively financing its operations through supplier credit. This situation points towards a highly favorable working capital cycle, possibly driven by supplier payment terms exceeding receivables collection periods or other liquidity management strategies.

Finally, as of June 30, 2025, the CCC is recorded at 0.00 days. This equilibrium position suggests that the company's timing of inventory, receivables, and payables aligns such that cash conversion occurs precisely within the same period, balancing out operational flows without significant accumulation of receivables or payables relative to each other.

Overall, the trend from 2021 through 2025 demonstrates increasing efficiency in cash conversion, culminating in a highly optimized or even negative cycle by 2024, before stabilizing at a neutral zero-day cycle in 2025. This progression indicates a strategic shift towards leveraging supplier terms and improving operational liquidity management over the analyzed period.