Western Digital Corporation (WDC)

Short-term

Turnover ratios

The activity ratios of Western Digital Corporation, specifically inventory turnover, receivables turnover, payables turnover, and working capital turnover, exhibit notable trends over the period from September 2020 through June 2025.

Inventory Turnover:
The inventory turnover ratio experienced fluctuations throughout the period, beginning at 3.78 in September 2020 and declining generally until the third quarter of 2023, reaching a low of approximately 2.75. However, starting in late 2023, there is a significant upward movement, with the ratio surging to 6.95 by March 2025. This substantial increase indicates a marked improvement in inventory management efficiency, suggesting that inventory is being sold and replenished at a much faster pace in the latter part of the period.

Receivables Turnover:
Receivables turnover ratios initially exhibit some variability but generally maintain a level between approximately 6 and 9 times. Notably, the ratio dips to around 5.84 in late 2024, reflecting a slower collection period, but then rebounds sharply to 9.83 in March 2025. The improving receivables turnover suggests enhanced collection efficiency over time, culminating in a shorter receivable collection period in the latest data.

Payables Turnover:
The payables turnover ratio shows some fluctuation, with a gradual upward trend from about 5.39 in September 2020 to a peak of 7.44 in December 2022, indicating increasingly rapid payment to suppliers. Subsequently, there is a decline to around 5.16 in late 2024, followed by a notable spike of 8.78 in December 2024, and subsequently stabilizes around 7.08 by March 2025. The elevated ratios towards the end suggest that the company is managing its payables more promptly, possibly reflecting improved cash flow management or strategic supplier payment policies.

Working Capital Turnover:
This ratio displays significant variability, with an overall upward trend toward the latter part of the period. Starting at about 3.63 in September 2020, the ratio generally remains within the 3–4 range until late 2022. A marked spike occurs in June 2025, reaching 30.32, implying a considerable increase in sales relative to working capital investment. This dramatic change indicates a pronounced improvement in operational efficiency, where the company is generating substantially higher sales per unit of working capital by the end of the observed period.

Summary:
Overall, Western Digital Corporation's activity ratios indicate an initial period of relative stability with moderate fluctuations. From late 2023 onward, there is a pronounced improvement across inventory and receivables turnover ratios, suggesting enhanced inventory management and collections. The payables turnover reflects periods of acceleration and deceleration but ultimately aligns with improved cash management strategies. The exceptional rise in working capital turnover toward mid-2025 underscores a significant gains in operational efficiency, likely driven by better asset utilization and increased sales productivity relative to working capital invested.

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Average number of days

Western Digital Corporation's activity ratios reflect notable trends in inventory management, receivables collection, and payables payment practices over the analyzed period.

Days of Inventory on Hand (DOH):
The company's inventory holding period exhibited a general upward trend from approximately 96.49 days at the end of September 2020 to a peak of around 132.83 days in March 2023. This suggests a period of accumulating inventory, potentially due to inventory buildup in response to supply chain factors or strategic stockpiling. Subsequently, the DOH declined significantly to approximately 52.55 days in March 2025, indicating a substantial reduction in inventory levels and a shift toward more efficient inventory management or demand-driven sales declines.

Days of Sales Outstanding (DSO):
The receivables collection period demonstrated variability, with an initial decrease from 46.06 days in September 2020 to approximately 40.97 days in March 2023. This indicates a trend of improving collections and shorter customer credit periods during this phase. However, from late 2023 onward, DSO increased again, reaching around 62.53 days by September 2024, before declining sharply to roughly 37.14 days in March 2025. This fluctuation reflects changes in credit terms, collection efficiency, or customer payment behaviors over time, with recent periods showing an improved collection cycle.

Number of Days of Payables:
The period the company takes to settle its payables initially hovered around 65 to 68 days, indicating a relatively consistent payables management approach. Notably, there was a decrease to approximately 49.05 days at the end of 2022, followed by fluctuations, with increasing durations reaching around 70.79 days in September 2024. A significant decline then occurred to approximately 41.56 days in December 2024, followed by a modest increase to 56.13 days in March 2025. These variations point to changes in payment policies, supplier negotiations, or strategic cash management efforts.

In summary, Western Digital's activity ratios depict periods of inventory accumulation and reduction, fluctuating receivables collection times, and variable payables payment practices. Recent data indicate a potential move toward leaner inventory levels, improved receivables collection efficiency, and dynamic payables management, aligning with efforts to optimize working capital and reflect evolving operational conditions.

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See also:

Western Digital Corporation Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The analysis of Western Digital Corporation's long-term activity ratios reveals notable trends over the analyzed periods, highlighting the company's evolving operational efficiency and asset utilization.

Fixed Asset Turnover Ratio:
This ratio measures how effectively the company's fixed assets generate sales revenue. Between September 30, 2020, and June 30, 2021, the ratio remains relatively stable, fluctuating narrowly around 5.32 to 5.63, indicating consistent utilization of fixed assets during this period. However, from September 30, 2021, onward, there is a marked decline, with the ratio decreasing steadily to 4.27 by December 31, 2022, and further down to 3.40 by June 30, 2023. This downward trend suggests a diminishing efficiency in using fixed assets to generate sales, possibly due to increased asset base, underutilization, or strategic shifts in asset deployment.

Total Asset Turnover Ratio:
This metric assesses overall asset utilization relative to sales generated. The ratio shows a gradual upward trend from its low point of 0.50 on June 30, 2023, to 0.88 by March 31, 2025, implying improved efficiency in using total assets to generate revenue over this period. Prior to this, the ratio experienced some fluctuations, descending from a high of 0.73 on December 31, 2021, to as low as 0.46 at the end of 2023, reflecting periods of lower asset utilization. The recent increase suggests a turnaround in operational efficiency, possibly due to asset optimization, improved sales performance, or a combination of both.

Summary:
Overall, Western Digital's fixed asset turnover ratio has declined significantly over time, indicating a reduced capacity to generate sales from fixed assets, which may reflect increased asset investment or less effective asset utilization. Contrastingly, the total asset turnover ratio shows signs of recovery in the most recent periods, signaling an overall improvement in asset efficiency at the total company level. The combination of these trends indicates a complex picture of asset management, with potential shifts in operational focus or strategic asset deployment influencing long-term activity ratios.

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See also:

Western Digital Corporation Long-term (Investment) Activity Ratios (Quarterly Data)