Oracle Corp. (NYSE:ORCL)

The operating activity ratios exhibit varied trends over the observed period. Generally, a decline in efficiency metrics is apparent in the later years, particularly concerning payables management. Receivable turnover demonstrates a gradual decrease, while payables turnover shows significant volatility and a marked decline towards the end of the period. Working capital turnover is highly erratic, with a substantial spike in one period, potentially requiring further investigation.

Receivables Turnover

Receivables turnover generally fluctuated between 7.48 and 9.28 from August 2020 through February 2023. However, a consistent downward trend is observed from May 2023 onwards, decreasing from 7.82 to 5.98 by February 2026. This suggests a lengthening of the time it takes to collect receivables, potentially indicating deteriorating credit policies or collection efforts.

Payables Turnover

Payables turnover demonstrates considerable volatility. It decreased from 14.72 in August 2020 to a low of 6.68 in November 2022, then increased to 13.67 in May 2023 before plummeting to 1.89 in February 2026. This dramatic decline suggests a significant slowdown in paying suppliers, potentially impacting supplier relationships or indicating liquidity issues. The extreme values in the later periods warrant further scrutiny.

Working Capital Turnover

Working capital turnover is highly variable. It shows an increase from 1.26 in August 2020 to 3.86 in February 2022, followed by a substantial and anomalous spike to 113.15 in February 2025. This outlier significantly distorts the overall trend and requires investigation to determine its cause. The ratio then decreases to 4.53 in August 2025. The overall pattern is inconsistent and difficult to interpret without additional context.

Average Receivable Collection Period

The average receivable collection period generally increased over time. Starting at 43 days in August 2020, it gradually rose to 56 days by February 2026, with fluctuations throughout the period. This increase aligns with the declining receivables turnover and reinforces the observation of a lengthening collection cycle.

Average Payables Payment Period

The average payables payment period exhibited a substantial increase over the period. Beginning at 25 days in August 2020, it rose to 55 days by February 2025, and then dramatically increased to 193 days in February 2026. This lengthening payment period corresponds with the declining payables turnover and suggests a deliberate strategy to conserve cash or potential difficulties in meeting payment obligations.

In summary, the observed trends suggest a deterioration in short-term operating efficiency, particularly in the management of payables. The significant fluctuations and declines in key ratios towards the end of the period warrant further investigation to understand the underlying causes and potential implications for the organization’s financial health.

The receivables turnover ratio exhibits a generally declining trend over the observed period, although with notable fluctuations. Initially, the ratio demonstrated relative stability, followed by a period of increased volatility and a more pronounced downward trajectory in recent quarters.

Initial Period (Aug 31, 2020 – May 31, 2021)

The receivables turnover ratio began at 8.57 and fluctuated between 7.48 and 9.11. This initial period suggests a reasonably consistent rate at which the company collects its receivables, with a slight dip in the spring of 2021. The ratio remained above 8.0 for most of this timeframe.

Stabilization and Subsequent Decline (Aug 31, 2021 – May 31, 2023)

From August 2021 through May 2023, the ratio generally remained between 7.13 and 7.82, indicating a slight decrease from the initial period but still within a relatively narrow range. A minor recovery was observed in early 2022, but the ratio quickly returned to the lower end of this range.

Accelerated Downward Trend (Aug 31, 2023 – May 31, 2025)

Beginning in August 2023, the receivables turnover ratio experienced a more significant and consistent decline. It decreased from 7.82 to 5.98 by February 2026. This represents a substantial reduction in the efficiency of collecting receivables. The ratio fell below 6.0 in the final two observed periods.

Correlation with Revenues

While revenues generally increased over the period, the receivables turnover ratio decreased. This suggests that, despite higher sales, the company is taking longer to collect payment from its customers. This decoupling of revenue growth and receivables turnover warrants further investigation. The increase in trade receivables, net of allowances for credit losses, appears to be outpacing revenue growth in the latter part of the period.

The observed decline in receivables turnover could indicate several factors, including a loosening of credit terms, an increase in the proportion of sales to customers with longer payment cycles, or potential issues with the effectiveness of the company’s collection processes. Continued monitoring of this ratio is recommended, along with a detailed analysis of the underlying accounts receivable aging to identify any potential credit risks.

The accounts payable turnover ratio exhibits considerable fluctuation throughout the observed period. Initially, the ratio demonstrates a decline from 14.72 in August 2020 to 10.71 in November 2020, followed by a continued decrease to 9.49 in February 2021. A slight recovery is then noted, peaking at 10.79 in August 2021, before resuming a downward trajectory.

Overall Trend

A general decreasing trend in the payables turnover ratio is apparent over the long term, particularly pronounced from November 2021 through May 2025. The ratio begins at 8.03 in November 2021 and falls to a low of 1.89 in February 2026. This suggests a lengthening of the time it takes to pay suppliers.

From February 2022 to August 2022, the ratio remains relatively stable, fluctuating between 7.65 and 6.72. However, a more significant decline commences in November 2022, continuing through February 2024. A temporary increase to 9.02 is observed in February 2024, but this is followed by a sharp decrease to 6.42 in May 2024, and further declines in subsequent periods.

Cost of Revenues & Payables Relationship

The cost of revenues generally increases throughout the period, rising from US$1,880 million in August 2020 to US$6,092 million in August 2025. While cost of revenues is increasing, accounts payable also increases substantially, but at a rate that does not maintain the turnover ratio. This suggests a potential shift in supplier relationships or payment terms.

The most dramatic decrease in the payables turnover ratio occurs between May 2024 and February 2026, falling from 6.42 to 1.89. This substantial decline warrants further investigation to determine the underlying causes, such as changes in purchasing practices, supplier negotiations, or potential liquidity concerns. The ratio’s decline in the latter part of the period is particularly noteworthy.

Recent Performance

The most recent data points indicate a consistently low payables turnover ratio. The ratio is 2.23 in February 2025 and 1.89 in February 2026. This suggests a significant extension of payment terms or a potential build-up of payable balances relative to cost of revenues.

In summary, the payables turnover ratio demonstrates a long-term decreasing trend with periods of relative stability and punctuated by significant declines, particularly in the most recent quarters. This trend suggests a potential shift in the company’s payment practices and warrants further scrutiny.

The working capital turnover ratio exhibits considerable fluctuation over the observed period. Initially, the ratio demonstrates an increasing trend from August 2020 to February 2021, followed by a decline and subsequent volatility. A significant outlier appears in February 2025, followed by a return to a more moderate level in May 2025.

Initial Trend (Aug 31, 2020 – Feb 28, 2021)

From August 2020 through February 2021, the working capital turnover ratio increased from 1.26 to 1.69. This suggests a more efficient utilization of working capital to generate revenue during this period. The increase indicates that the company was able to support higher sales volumes with the same level of working capital investment.

Volatility and Decline (May 31, 2021 – Nov 30, 2022)

Following February 2021, the ratio experienced volatility, decreasing to 1.29 by May 2021, then rising to 3.39 by November 2021. This was followed by a decline to 3.86 in February 2022 and 3.50 in May 2022. Notably, values are missing for August 2022 through February 2023, hindering a complete assessment of this period. The negative working capital values observed from August 2022 onwards likely contribute to the inability to calculate a meaningful ratio during this timeframe.

Extreme Outlier and Subsequent Stabilization (Feb 29, 2024 – May 31, 2025)

An exceptionally high ratio of 113.15 is recorded in February 2025. This substantial increase is likely attributable to the significantly negative working capital position reported for that period. Following this outlier, the ratio decreased to 4.53 in May 2025, suggesting a return towards more typical levels, though still elevated compared to earlier periods. The negative working capital continues to influence the ratio’s magnitude.

Working Capital Trends

The fluctuations in the working capital turnover ratio are closely linked to the trends in working capital itself. A consistent decline in working capital is observed from August 2020, culminating in negative values from August 2022 onwards. This suggests a shift in the company’s financing strategy or operational changes impacting its short-term asset and liability management. Revenues generally increased over the period, but the negative working capital position increasingly dominates the ratio calculation.

In conclusion, the working capital turnover ratio demonstrates a complex pattern influenced by both revenue generation and significant changes in working capital levels. The negative working capital observed in later periods requires further investigation to understand the underlying causes and potential implications for the company’s financial health.

The average receivable collection period exhibits a generally increasing trend over the observed timeframe, though with notable fluctuations. Initially, the period demonstrated relative stability, followed by a period of increased variability and a more pronounced upward trajectory in later quarters.

Initial Period (Aug 31, 2020 – Feb 28, 2021)

The average receivable collection period began at 43 days, decreased to 41 days, and then returned to 43 days. This suggests a stable collection process during this initial phase, with minor variations.

Fluctuating Period (May 31, 2021 – Feb 28, 2022)

A more volatile pattern emerged, with the collection period decreasing to 40 days, then increasing to 39 days, followed by a rise to 40 days, and subsequently increasing to 51 days. This period indicates a potential shift in collection efficiency or changes in customer payment terms. The period then decreased slightly to 49 days and remained at 49 days.

Consistent Increase (May 31, 2022 – Aug 31, 2023)

The collection period continued to increase, reaching 47 days, 51 days, 47 days, and 48 days. This suggests a sustained lengthening of the time required to collect receivables.

Accelerated Increase (Nov 30, 2023 – Aug 31, 2025)

A more rapid increase is observed, with the collection period rising from 51 days to 54 days, then holding steady at 54 days for three consecutive quarters. The period then increased to 53 days, 54 days, 55 days, 56 days, and finally reaching 61 days. This represents the most significant upward trend throughout the entire observation period.

Overall Trend

From the beginning of the period to the end, the average receivable collection period increased from 43 days to 61 days. This represents a 42% increase over the observed timeframe. The latter portion of the period demonstrates a more pronounced and consistent lengthening of the collection cycle.

The observed increases in the average receivable collection period may warrant further investigation to determine the underlying causes. Potential factors could include changes in credit policies, slower customer payment behavior, or inefficiencies in the collection process.

The average payables payment period exhibited considerable fluctuation over the observed timeframe. Initially, the period remained relatively stable, then increased significantly before declining and subsequently becoming highly volatile. A clear pattern of increasing variability emerges in the later periods.

Initial Stability (Aug 31, 2020 – May 31, 2021)

The average payables payment period began at 25 days and fluctuated within a narrow range, peaking at 38 days before returning to 34 days. This suggests a consistent, albeit slightly varying, approach to settling obligations during this period.

Increase and Peak (Aug 31, 2021 – May 31, 2022)

A noticeable increase in the average payables payment period is observed, rising from 34 days to a peak of 57 days. This indicates a lengthening of the time taken to pay suppliers, potentially due to changes in negotiation strategies, cash flow management, or supplier terms.

Decline and Volatility (Aug 31, 2022 – May 31, 2023)

Following the peak, the average payables payment period decreased to 27 days, suggesting a return to faster payment processing. However, this decline was followed by renewed increases and fluctuations, indicating instability in payment practices.

Significant Increase and High Variability (Aug 31, 2023 – May 31, 2025)

The period experienced a substantial increase, reaching 193 days in February 2026. This is accompanied by significant volatility, with values ranging from 40 to 193 days. This suggests a considerable shift in payment behavior, potentially driven by external factors or deliberate strategic changes. The extreme values observed in this period warrant further investigation.

Recent Trend (Feb 28, 2026)

The most recent value, 164 days, indicates that the average payables payment period remains elevated, although slightly decreased from the peak. This suggests that the longer payment terms established in late 2023 and early 2024 are continuing, but potentially moderating.

Overall, the trend demonstrates a transition from relative stability to increasing variability and, ultimately, a prolonged period of significantly extended payment terms. The recent fluctuations and high values require careful monitoring and analysis to understand the underlying causes and potential implications.