Seagate Technology PLC (STX)

Seagate Technology PLC's liquidity ratios have exhibited a declining trend over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.51 in 2020 to 1.08 in 2024. This indicates a potential weakening of the company's liquidity position over the period.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also decreased from 1.04 in 2020 to 0.61 in 2024. This suggests that Seagate may have a lower ability to cover its short-term liabilities with its most liquid assets.

Furthermore, the cash ratio, which specifically looks at the company's ability to pay off current liabilities with cash and cash equivalents, fluctuated over the years but displayed a decreasing trend overall. A decrease from 0.63 in 2020 to 0.44 in 2024 indicates that Seagate may have a reduced capacity to settle its immediate obligations with cash on hand.

Overall, the declining trend in Seagate Technology PLC's liquidity ratios raises concerns about its short-term financial health and ability to handle potential liquidity challenges. Investors and stakeholders may need to closely monitor the company's liquidity management practices and assess the potential impact on its financial stability.

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Additional liquidity measure

The cash conversion cycle of Seagate Technology PLC has shown fluctuating trends over the past five years. In June 2024, the company's cash conversion cycle was negative, implying an efficient cash management system where it was able to collect cash from customers before paying its suppliers. This could be an indication of strong working capital management.

However, looking at the trend over the historical data, the cash conversion cycle has been on the rise since June 2020. In June 2023, it increased to 13.48 days, indicating a slowdown in the company's ability to convert inventory and receivables into cash. By June 2022, the cycle further increased to 27.44 days, reflecting longer periods taken for the company to generate cash from its operations.

It is worth noting that in June 2024, there was a significant improvement as the cash conversion cycle turned negative, suggesting enhanced efficiency in cash management. This improvement could be attributed to better inventory management and collection of receivables.

Overall, while the recent negative cash conversion cycle in June 2024 shows improved efficiency, the fluctuating trend over the past five years indicates variations in Seagate Technology PLC's ability to efficiently manage its working capital. Monitoring and analyzing factors affecting the cash conversion cycle will be crucial for the company's financial health and performance in the future.