Western Digital Corp. (NASDAQ:WDC)

Total Asset Turnover

The reported and adjusted total asset turnover ratios demonstrate a generally stable pattern from 2018 through 2022, maintaining values around 0.62 to 0.72. However, in 2023, both ratios exhibit a significant decline to approximately 0.50, indicating reduced efficiency in generating sales from assets during the most recent period.

Current Ratio

Both reported and adjusted current ratios reveal a steady downward trend over the years. Starting from values close to 2.39 and 2.48 in 2018 respectively, these ratios consistently decrease to 1.45 and 1.48 by 2023. This trend suggests a weakening short-term liquidity position, implying less cushion to cover current liabilities with current assets.

Debt to Equity Ratio

Reported and adjusted debt to equity ratios peaked slightly above 1.00 in 2019, indicating relatively higher leverage at that time. Since then, the ratios declined notably to around 0.57-0.59 in 2022, signaling efforts to reduce reliance on debt relative to equity. The slight increase observed in 2023 to approximately 0.60-0.62 suggests a moderate uptick in leverage during the latest period.

Debt to Capital Ratio

The debt to capital ratios mirror the debt to equity trends, with values declining from roughly 0.49-0.51 in 2018-2019 to a low near 0.36-0.37 in 2022, demonstrating decreased overall financial leverage. The marginal rise to 0.38 in 2023 indicates a small increase in the proportion of debt financing to total capital.

Financial Leverage

Financial leverage ratios exhibit a downward trajectory starting from about 2.54 reported in 2018 to approximately 2.08 in 2023. This decline reflects reduced use of debt relative to equity and assets over time, consistent with the previously noted debt ratio decreases.

Net Profit Margin

Profitability as measured by net profit margin has been volatile. After a positive margin in 2018 (around 3.27% reported), the company experienced negative margins in 2019 and 2020, recovered to positive and improving margins in 2021 and 2022 (up to about 7.98%), but then underwent a steep decline to a significantly negative margin near -13.85% in 2023. This pattern indicates fluctuating profitability with a sharp loss in the latest year.

Return on Equity (ROE)

ROE follows a similar pattern to net margins, with positive returns in 2018, negative results in 2019 and 2020, improved profitability in 2021 and 2022 (with reported ROE reaching 12.27%), and a marked negative return of roughly -14.55% in 2023. This reflects swings in shareholders' profitability, with recent periods showing strong gains before a substantial setback.

Return on Assets (ROA)

ROA patterns broadly align with those of net margin and ROE. The metric was positive in 2018, turned negative through 2019 and 2020, improved to positive territory again in 2021 and 2022, and declined sharply to approximately -6.98% reported in 2023. This indicates that asset profitability has deteriorated in the latest year after a period of recovery.

Revenue Trends

Revenue exhibited a decline from 20,647 million USD in 2018 to 16,569 million USD in 2019, followed by a slight increase stabilizing around 16,700 million USD in 2020 and 16,922 million USD in 2021. A noticeable increase occurred in 2022, reaching 18,793 million USD, before falling sharply to 12,318 million USD in 2023.

Total Assets Analysis

Total assets consistently decreased over the observed period, dropping from 29,235 million USD in 2018 to 24,429 million USD in 2023. The decline was gradual from 2018 through 2022, indicating a steady reduction in asset base, with a more pronounced reduction noted in 2023.

Asset Turnover Ratios

The reported total asset turnover ratio declined from 0.71 in 2018 to 0.63 in 2019, then remained relatively stable at 0.65 for 2020 and 2021. An increase to 0.72 was recorded in 2022, suggesting improved efficiency in asset utilization that year. However, the ratio dropped significantly to 0.5 in 2023. The adjusted total asset turnover ratio follows a similar pattern, confirming the trends observed in the reported ratio.

Adjusted Total Assets

Adjusted total assets showed a pattern consistent with total assets, decreasing from 29,192 million USD in 2018 to 24,318 million USD in 2023. Minor fluctuations occurred but the overall trend was a reduction in adjusted asset base over time.

Overall Insights

The financial data indicates a contraction in both revenue and asset base in the latest reported year, 2023, with revenue decreasing sharply despite past growth in 2022. Asset turnover ratios suggest a decline in operational efficiency in 2023 compared to the prior year peak. The general trend over the entire period is one of declining asset levels with fluctuating revenue and efficiency metrics, pointing to potential challenges in maintaining growth and asset utilization.

The financial data indicates a downward trend in the liquidity position over the six fiscal years analyzed. Current assets exhibit fluctuations, starting at $10,638 million in 2018, declining notably to $7,886 million by 2023. This reflects a reduction of approximately 26% from the initial value.

Current liabilities have increased steadily over the same period, rising from $4,456 million in 2018 to $5,434 million in 2023, representing a growth of about 22%. The adjusted current liabilities follow a similar upward trajectory, increasing from $4,288 million to $5,337 million.

Consequently, the reported current ratio, which measures the ability to cover short-term obligations, declines from 2.39 in 2018 to 1.45 in 2023. This suggests that the company's liquidity buffer is decreasing over time. Similarly, the adjusted current ratio, which likely accounts for more refined or conservative liability estimates, also decreases from 2.48 to 1.48 during the period.

The steady decrease in both reported and adjusted current ratios highlights a diminishing short-term financial safety margin. The ratio movements indicate that, while current assets have generally waned, liabilities have increased, exerting pressure on the company's ability to meet its immediate obligations without additional financing.

Overall, the data suggests a trend toward tighter liquidity conditions, warranting close monitoring to ensure sufficient working capital and solvency in the near term.

The financial data reveals notable trends in the company's capital structure over the six-year period from June 2018 to June 2023.

Total debt and adjusted total debt

Both total debt and adjusted total debt consistently declined from 2018 through 2022, decreasing from approximately $11.2 billion to around $7.0 billion. This indicates a strategic effort to reduce overall leverage. However, in the final year, debt levels stabilized with a slight increase observed in total debt (from $7.0 billion to $7.07 billion) and in adjusted total debt (from $7.34 billion to $7.35 billion), suggesting a possible shift to maintaining debt levels.

Shareholders’ equity and adjusted shareholders’ equity

Shareholders’ equity demonstrated fluctuations but overall exhibited a resilient upward trend, increasing from about $11.5 billion in 2018 to a peak of approximately $12.2 billion in 2022. A slight decline to $11.7 billion occurred in 2023. Adjusted shareholders’ equity followed a similar pattern, rising from $11.6 billion in 2018 to a high of $12.5 billion in 2022, then tapering to $11.85 billion in 2023. These movements suggest growing net assets with recent moderation.

Debt to equity ratios (reported and adjusted)

Both reported and adjusted debt to equity ratios show a general declining trend over the period, indicating an improvement in the leverage position. The reported debt to equity ratio declined from near parity at 0.97 in 2018 to 0.57 in 2022, reflecting decreased reliance on debt relative to equity. The ratio rose slightly to 0.60 in 2023. Adjusted debt to equity ratios mirror this trend, decreasing from 0.98 in 2018 to 0.59 in 2022, then increasing marginally to 0.62 in 2023. The declines through 2022 illustrate strengthened equity bases relative to debt, while the recent upticks suggest a cautious rebalancing.

Overall, the data depicts a period of debt reduction paired with equity growth, leading to lower leverage ratios and an improved capital structure. The minor reversal in 2023 indicates a potential stabilization phase in financial strategy, balancing debt and equity levels after several years of deleveraging.

Total Debt

The total debt of the company has exhibited a steady decline over the observed period, decreasing from $11,172 million in June 2018 to $7,070 million in June 2023. This downward trend suggests a consistent effort to reduce debt levels.

Total Capital

Total capital also decreased from $22,703 million in June 2018 to $18,793 million in June 2023. The reduction was more moderate compared to the decline in total debt, indicating some diminution in the company's overall capital base over time.

Reported Debt to Capital Ratio

The reported debt to capital ratio initially increased slightly from 0.49 in June 2018 to 0.51 in June 2019 but then experienced a consistent and notable decline to 0.36 in July 2022, followed by a slight increase to 0.38 in June 2023. This pattern reflects improvements in leverage and a stronger capital structure, especially after 2019.

Adjusted Total Debt

Adjusted total debt follows a similar downward trajectory as reported total debt, decreasing from $11,344 million in June 2018 to $7,354 million in June 2023. The adjusted figures remain consistently slightly higher than the reported debt, indicating some adjustments for more comprehensive debt measurement.

Adjusted Total Capital

The adjusted total capital decreased from $22,978 million in June 2018 to $19,210 million in June 2023. The decline is consistent over the periods, showing a reduction in this adjusted measure of capital, though the decrease is not as pronounced as in debt levels.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio mirrors the reported ratio's trend, starting at 0.49 in June 2018, peaking slightly at 0.51 in June 2019, and subsequently dropping to 0.37 in July 2022 before a marginal rise to 0.38 in June 2023. This indicates a consistent reduction in leverage over the years with a slight recent uptick.

Total Assets

Total assets show a general declining trend over the six-year period, decreasing from $29,235 million in mid-2018 to $24,429 million by mid-2023. The asset base experienced a moderate decline between 2018 and 2020, followed by smaller fluctuations and another notable reduction in the final year.

Shareholders’ Equity

Shareholders’ equity initially declined from $11,531 million in 2018 to a low of $9,551 million in 2020. After this trough, equity values recovered substantially in the subsequent years, peaking at $12,221 million in 2022 before slightly retreating to $11,723 million in 2023. This indicates a recovery in the company's net worth after the early years.

Reported Financial Leverage

The reported financial leverage ratio exhibits a decreasing pattern, albeit with some volatility. The ratio increased slightly from 2.54 in 2018 to 2.69 in 2020, then declined steadily to 2.08 in 2023. This suggests a gradual reduction in the use of debt relative to equity over the latter half of the period.

Adjusted Total Assets

Adjusted total assets closely mirror the trend of reported total assets, with values declining from $29,192 million in 2018 to $24,318 million in 2023. Minor variations between reported and adjusted figures suggest consistent adjustments throughout the years.

Adjusted Shareholders’ Equity

Adjusted equity figures follow a trend similar to reported equity, initially declining from $11,634 million in 2018 to $10,004 million in 2020, followed by a sustained increase to $12,466 million in 2022 and a modest decrease to $11,856 million in 2023. The adjusted equity values remain slightly higher than reported figures across the timeframe.

Adjusted Financial Leverage

The adjusted leverage ratio also shows a declining trend from 2.51 in 2018 to 2.05 in 2023, reflecting progressive deleveraging. The ratio rose slightly from 2018 to 2020 but then decreased steadily for the next three years, indicating an improvement in capital structure over time.

Overall Analysis

The data reveals a contraction in the asset base alongside a recovery in equity levels after 2020, which has contributed to a consistent decline in financial leverage. Both reported and adjusted figures demonstrate similar patterns, underscoring the company's efforts to reduce reliance on debt and strengthen equity. The recovery in equity post-2020 may suggest improved profitability or retained earnings, while the deleveraging trend points to a more conservative or stabilized financial policy in recent years.

The financial performance exhibits significant volatility over the examined periods, with notable fluctuations in profitability and revenue.

Net Income (Loss)

The net income demonstrated considerable instability, starting with a positive figure of $675 million in 2018, followed by a sharp decline to a loss of $754 million in 2019. The trend of negative earnings continued in 2020 with a $250 million loss but reversed in 2021 and 2022, where net income rose to $821 million and further to $1.5 billion respectively. However, in 2023, the company recorded a substantial loss of $1.706 billion, marking the most significant negative result in the period analyzed.

Revenue, Net

Revenue showed a declining trend from 2018 to 2019, dropping from approximately $20.6 billion to $16.6 billion. It stabilized somewhat in 2020 and 2021 around the $16.7 to $16.9 billion range, then experienced a recovery in 2022, increasing to near $18.8 billion. This upward movement was not sustained, as revenue sharply declined in 2023 to $12.3 billion, the lowest level in the six-year span.

Reported Net Profit Margin

The reported net profit margin correlated with the changes in net income, ranging from a positive margin of 3.27% in 2018 to a negative margin of -4.55% in 2019. It remained negative in 2020 at -1.49% before improving to 4.85% in 2021 and peaking at 7.98% in 2022. The margin reversed drastically to -13.85% in 2023, indicating significant operational challenges or extraordinary expenses impacting profitability.

Adjusted Net Income (Loss)

Adjusted net income followed a similar pattern to the reported net income, starting at $353 million in 2018 and turning negative in 2019 and 2020 with losses of $377 million and $363 million respectively. The adjusted income returned to positive territory in 2021 and grew markedly to $1.239 billion in 2022. Nevertheless, a notable decline occurred in 2023, with an adjusted loss of $1.803 billion, closely mirroring the reported figures.

Adjusted Net Profit Margin

The adjusted net profit margin was positive at 1.71% in 2018, followed by negative margins of -2.28% in 2019 and -2.17% in 2020. Improvements were observed in 2021 (2.92%) and 2022 (6.59%), suggesting better operational performance or exclusion of one-time items. Despite this, the margin deteriorated significantly to -14.64% in 2023, reflecting the substantial adjusted net loss reported.

Overall, the data indicates a cycle of recovery and decline, with peak performance during 2021 and 2022 followed by a pronounced downturn in 2023 in both revenue and profitability metrics. The significant negative figures in 2023 suggest the occurrence of impactful adverse factors during that fiscal year, adversely affecting the company’s financial health.

Net Income (Loss)

The net income demonstrated significant volatility over the examined periods. Initially, a positive net income of $675 million was reported, followed by a sharp decline to a loss of $754 million. The loss narrowed somewhat in 2020, but profitability returned in 2021 with a net income of $821 million, increasing further to $1500 million in 2022. However, the latest period saw a marked reversal, with net income plunging to a loss of $1706 million. This pattern indicates inconsistent profitability and notable fluctuations in the company's earnings.

Shareholders' Equity

Shareholders' equity showed a general declining trend from 2018 ($11,531 million) to 2020 ($9,551 million). After this low, equity recovered, increasing to $10,721 million in 2021 and further to a peak of $12,221 million in 2022. The most recent period registered a slight decrease to $11,723 million. Despite some fluctuations, equity levels remained relatively stable overall, with a tendency towards recovery after the initial decline.

Reported Return on Equity (ROE)

The reported ROE closely mirrored net income trends, underscoring the company’s fluctuating profitability. Starting at a positive 5.85% in 2018, it fell sharply into negative territory in 2019 (-7.56%) and remained negative in 2020 (-2.62%). ROE recovered to positive levels in 2021 (7.66%) and peaked at 12.27% in 2022. In 2023, ROE turned strongly negative again, reaching -14.55%. This volatility signals instability in the company's ability to generate profit relative to shareholder equity.

Adjusted Net Income (Loss)

Adjusted net income shows a similar pattern to reported net income, confirming the earnings volatility even after adjustments. The adjusted figures started at $353 million, declined to a loss of $377 million in 2019 and a further loss of $363 million in 2020. The company returned to profitability in 2021 with $494 million, followed by a sharp increase to $1,239 million in 2022. The latest figure reflects a sizable adjusted loss of $1,803 million. This suggests that the adjustments do not significantly alter the underlying profitability trends.

Adjusted Shareholders' Equity

Adjusted shareholders' equity reflected a decline from $11,634 million in 2018 to $10,004 million in 2020. Subsequently, it rebounded, reaching $10,896 million in 2021 and increasing further to $12,466 million in 2022. In 2023, equity slightly decreased to $11,856 million. The overall movement parallels that of reported equity, indicating stability in the company’s equity base after adjusting for certain items.

Adjusted Return on Equity (ROE)

Adjusted ROE trends also follow the pattern of reported ROE with less extreme values initially but ending with significant volatility. Starting at 3.03% in 2018, it decreased to negative values in 2019 (-3.61%) and 2020 (-3.63%). It then improved to 4.53% in 2021 and rose substantially to 9.94% in 2022. The most recent period saw adjusted ROE fall precipitously to -15.21%. These results reinforce the observation of fluctuating profitability and challenges in sustaining returns on equity.

The financial data reveals significant fluctuations in profitability and asset base over the six-year period. Net income demonstrated high volatility, with positive earnings in 2018, a sharp loss in 2019, ongoing losses in 2020, recovery in 2021 and 2022, and a substantial loss again in 2023. This volatility is also reflected in the adjusted net income figures, which depict a similar pattern of decline, moderate recovery, and subsequent significant loss.

Total assets, both reported and adjusted, show a generally declining trend across the period. The total asset base decreased from over $29 billion in 2018 to approximately $24 billion in 2023. Although there are minor year-to-year fluctuations, the overall movement indicates a contraction of the asset base over time.

Return on Assets (ROA), both reported and adjusted, corroborates the profit and asset trends. ROA started positively in 2018, turned negative in 2019 and 2020, regained positive territory in 2021 and 2022, and then dropped sharply into negative territory again in 2023. The adjusted ROA figures, consistently lower than the reported ones in absolute terms, emphasize challenges in generating returns relative to the asset base, especially in recent years.

The pattern suggests that the company experienced periods of financial strain, notably in 2019, 2020, and 2023, which impacted both net profitability and return on assets. The improvement in net income and ROA during 2021 and 2022 indicates some recovery, but this was not sustained into 2023. Concurrently, the gradual reduction in assets may have constrained operational capacity or reflected strategic divestitures or impairments.

Profitability trends

Highly volatile net income with alternating periods of losses and gains, reflecting operational and possibly market challenges.

Asset base trends

Steady decrease in total assets over six years, suggesting contraction or reallocation of resources.

Return on Assets patterns

Fluctuating ROA aligned with net income variability, highlighting inconsistent asset utilization effectiveness.

Adjusted measures

Adjusted figures consistently show lower returns and similar income volatility, indicating recurring adjustments impacting net results and ROA.