Western Digital Corp. (NASDAQ:WDC)

The analysis of key turnover ratios over the indicated periods reveals several notable trends. The net fixed asset turnover ratio begins at a relatively high level around 6.67 in mid-2018, followed by a generally steady decline through to the end of 2023, where it reaches approximately 3.4. This indicates a reduced efficiency in utilizing fixed assets to generate sales revenue over time, suggesting possible asset accumulation or declining sales relative to the fixed asset base.

The total asset turnover ratio follows a similar but less pronounced trajectory. Starting around 0.71 in mid-2018, it experiences fluctuations but generally trends downward, dipping to about 0.46 by late 2023. This decline suggests that the company's overall asset base is becoming less effective in generating revenue, potentially reflecting changes in business operations, asset composition, or market conditions affecting sales volumes.

The equity turnover ratio displays a more moderate downward trend compared to the other two ratios. Beginning near 1.79 in mid-2018, it gradually deteriorates to approximately 1.03 by the end of 2023. This trend signals that the firm’s equity is generating diminishing sales over time, which could be attributed to slower growth in sales relative to shareholder equity or increasing equity levels without a proportional increase in revenue.

Net Fixed Asset Turnover

High initial efficiency in revenue generation from fixed assets around 2018, followed by a consistent decline to nearly half by 2023.

Total Asset Turnover

Moderate decrease from roughly 0.71 in 2018 to 0.46 in 2023, showing declining efficiency in overall asset utilization.

Equity Turnover

Gradual reduction from 1.79 to 1.03 across the period, indicating lower sales generation from equity investment.

Overall, the sustained decreases in these turnover ratios point to a trend of declining operational efficiency and possibly greater capital investment not matched by proportional increases in sales. This trend warrants further investigation into the company's asset management, capital expenditure decisions, and sales performance to identify underlying causes and opportunities for improvement.

The analyzed financial data reveals several key trends over the periods presented. Revenue net figures demonstrate notable fluctuations with an overall downward tendency in the most recent quarters. Initially, revenue showed moderate variability, peaking around 5336 million US dollars in the late 2017 period, followed by declines that became more pronounced from 2018 onwards. The decline accelerated markedly in the quarters following 2021, reaching a low near 2672 million US dollars by the third quarter of 2023, although a slight uptick is observed in the final quarter of 2023.

Property, plant, and equipment, net values reflect a generally moderate upward trend over the observed periods, indicating ongoing investment or asset retention despite revenue pressures. Beginning around 3048 million US dollars in late 2017, these assets grew steadily, reaching a peak of approximately 3718 million US dollars in late 2022 before experiencing a slight decrease toward the end of 2023. This suggests a continued commitment to capital investment or asset maintenance, potentially offsetting or preparing for operational demands despite declining revenues.

The net fixed asset turnover ratio, which measures how efficiently the company uses its fixed assets to generate revenue, exhibits a clear and sustained decline throughout the periods. Starting from relatively high values above 6.6 in early 2018, the ratio fell gradually each quarter, reaching near 3.4 by the end of 2023. This marked reduction indicates decreasing efficiency in asset utilization, signaling that while fixed assets have been increasing, their contribution to revenue generation is declining. This trend aligns with the revenue decrease and suggests possible overcapacity or reduced market demand impacting operational performance.

Revenue, net

Fluctuated with a peak early in the data, followed by an overall downward trend intensified in recent years.

Property, plant and equipment, net

Displayed a steady increase over time with minor reductions late in the dataset, indicating sustained investment in fixed assets.

Net fixed asset turnover ratio

Showed a continuous decline over the periods, reflecting decreasing efficiency in using fixed assets to generate revenue.

In summary, the company’s revenue diminished substantially over the latest quarters, while fixed assets increased moderately, resulting in declining asset turnover. This combination points to challenges in utilizing capital investments effectively to maintain revenue levels, highlighting potential operational inefficiencies or external market pressures affecting performance.

The net revenue demonstrates a fluctuating trend over the reported periods. Initially, revenue increased modestly from approximately $5.18 billion to $5.34 billion between the first two quarters. Subsequently, a general decline is observed through 2018 and 2019, with revenue decreasing from the high $5 billion range to around $3.6 billion by mid-2019. The revenue recovered somewhat towards the end of 2021, peaking near $5.05 billion, before experiencing a notable decline throughout 2022 and into 2023, reaching a low of approximately $2.67 billion by the third quarter of 2023. A slight increase occurs in the final reported quarter, rising to about $3.03 billion.

Total assets exhibit a gradual downward trajectory over the entire period. Beginning at around $30.5 billion, total assets decrease steadily, with minor fluctuations, to roughly $24.0 billion by the end of 2023. The decline shows consistent movement without significant reversals, indicating a reduction in asset base over the observed timeframe.

Total asset turnover, reported starting from the first quarter of 2018, exhibits a relatively stable to mildly volatile pattern. It initially stands at approximately 0.71, then declines gradually to around 0.46 by the end of 2023. Notably, the ratio fluctuates moderately through mid-2021, showing slight increases and decreases, but the overall trend is downward. This suggests a deteriorating efficiency in using assets to generate revenue, with turnover ratios falling nearly by one-third over the measured period.

Revenue, net

Shows cyclical behavior with periods of increase and decline. The peak near the end of 2021 at above $5 billion is followed by a continued decrease in 2022 and 2023, indicating potential challenges in market demand or sales performance in the recent periods.

Total assets

Displays a consistent decrease from over $30 billion to about $24 billion, implying either asset sales, depreciation exceeding new asset acquisition, or strategic downsizing over time.

Total asset turnover

Indicates a gradual decline in asset usage efficiency, dropping from around 0.71 to 0.46. This may reflect reduced revenue generation relative to the asset base, potentially due to decreased sales or increasing operational inefficiencies.

The financial data demonstrates a series of trends over the examined periods with regard to revenue, shareholders' equity, and equity turnover.

Revenue, net (US$ in millions)

The revenue exhibits a fluctuating pattern across the quarters. Initially, revenue held steady above 5,000 million USD through late 2017 and into early 2018, before experiencing a notable decline beginning in late 2018. This downward trend continued into 2019, with revenue dropping to near 3,600 million USD by mid-2019. Modest recoveries were seen towards early 2021, nearing 5,000 million USD again; however, from late 2021 onward, there is a consistent declining trajectory, bottoming around 2,672 million USD by the third quarter of 2023. A minor uptick appears at the last period (December 2023), rising slightly above 3,000 million USD. Overall, the data indicates increasing volatility with a general long-term decrease in revenue over the analyzed timeframe.

Shareholders’ equity (US$ in millions)

The shareholders' equity starts at 12,059 million USD in late 2017, showing slight fluctuations downward through 2019, decreasing to just below 10,000 million USD by mid-2019. Following this period, equity begins a recovery phase, increasing steadily through 2020 and 2021 to a peak of approximately 12,221 million USD at the end of 2021. Post-2021, equity remains mostly stable around the 12,000 million USD mark initially but exhibits a mild decline through 2023, ending close to 10,944 million USD. This suggests moderate erosion in equity value in recent years, after a period of recovery from the 2019 low point.

Equity turnover (ratio)

The equity turnover ratio is reported only from early 2018 onward, starting near 1.79 and remaining relatively stable around 1.7 to 1.8 through mid-2019. From late 2019, the ratio shows a gradual but clear declining trend, dropping steadily from approximately 1.66 to as low as 1.03 by the end of 2023. This decrease indicates a diminishing efficiency in generating revenue from the company's equity over time, suggesting that the company is producing less revenue per unit of shareholder equity as the periods progress.

In summary, the company experienced a peak and subsequent downturn in revenue and equity between 2018 and 2019, from which partial recovery occurred through 2021. However, the latest data shows declining revenue and equity turnover ratios, with equity also slightly down from its peak. The falling equity turnover ratio particularly highlights reduced operational efficiency in leveraging shareholders' equity to generate revenue in recent periods.