Arista Networks (ANET)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.43 | 1.67 | 2.25 | 2.41 | 4.74 |
| Receivables turnover | 5.72 | 4.75 | 5.71 | 5.96 | 6.16 |
| Payables turnover | 6.39 | 9.29 | 7.23 | 8.61 | 12.55 |
| Working capital turnover | 0.90 | 1.03 | 0.80 | 0.76 | 0.84 |
Arista Networks Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.
Inventory turnover has been gradually decreasing over the years, from 3.55 in 2019 to 1.15 in 2023. This suggests that the company is selling its inventory at a slower rate, which could indicate potential inefficiencies in inventory management or slowing sales.
Receivables turnover has shown some fluctuations but has generally remained at a healthy level, indicating that Arista Networks is efficient in collecting payments from customers. The increase from 4.75 in 2022 to 5.72 in 2023 is a positive sign of improved efficiency in collecting receivables.
Payables turnover has also fluctuated over the years but has generally decreased from 9.41 in 2019 to 5.13 in 2023. This indicates that the company is taking longer to pay its suppliers, which may have implications for its relationships with vendors.
Working capital turnover has shown a declining trend over the years, with a decrease from 1.03 in 2022 to 0.90 in 2023. This suggests that Arista Networks is generating less revenue relative to its working capital, which may indicate inefficiencies in utilizing its current assets to drive sales.
Overall, while Arista Networks has shown strengths in efficiently managing receivables, there are areas of concern regarding inventory management and working capital turnover. The company may need to address these issues to improve its overall operational efficiency and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 255.26 | 217.99 | 161.89 | 151.54 | 77.01 |
| Days of sales outstanding (DSO) | days | 63.82 | 76.90 | 63.95 | 61.24 | 59.24 |
| Number of days of payables | days | 57.09 | 39.31 | 50.46 | 42.41 | 29.09 |
In analyzing Arista Networks Inc's activity ratios, we observe fluctuations in its efficiency in managing inventory, collecting receivables, and paying off liabilities over the past five years.
1. Days of Inventory on Hand (DOH):
Arista Networks Inc's Days of Inventory on Hand (DOH) has shown an increasing trend, indicating that the company is taking longer to sell its inventory. The spike from 2019 to 2020 is significant, which may suggest issues related to inventory management or changes in production processes. Overall, the company's DOH has more than tripled from 2019 to 2023, signaling a potential inefficiency in inventory turnover.
2. Days of Sales Outstanding (DSO):
The Days of Sales Outstanding (DSO) metric reflects the average time it takes for Arista Networks Inc to collect payments from its customers. While there have been fluctuations over the years, the trend is relatively stable. The increase in 2023 compared to 2022 indicates that the company took longer to collect its accounts receivable in the most recent period. It is important for the company to keep this metric in check to ensure timely cash flow from sales.
3. Number of Days of Payables:
Arista Networks Inc's Number of Days of Payables shows the average number of days the company takes to pay its suppliers. There have been fluctuations in this ratio as well, with a noticeable increase in 2021 compared to 2020. This indicates that the company extended its payment terms to suppliers or faced delays in settling its payables. However, the number of days of payables decreased in 2022 but increased again in 2023. Managing this metric effectively is crucial for maintaining good relationships with suppliers.
Overall, Arista Networks Inc should focus on improving its inventory turnover, monitoring its accounts receivable collection process, and effectively managing its payables to enhance its cash flow and operational efficiency.
See also:
Arista Networks Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 57.69 | 46.11 | 37.49 | 72.04 | 61.49 |
| Total asset turnover | 0.59 | 0.65 | 0.51 | 0.49 | 0.58 |
Arista Networks Inc's long-term activity ratios provide insights into how efficiently the company is using its assets to generate sales. The fixed asset turnover ratio has shown fluctuations over the past five years, with a significant increase in 2020 followed by a drop in 2021 and a subsequent recovery in 2022 and 2023. This ratio indicates that Arista Networks has been able to generate $57.69 in sales for every dollar invested in fixed assets in 2023.
On the other hand, the total asset turnover ratio has also shown variability during the same period. The ratio declined in 2021 but has since been on an upward trend in 2022 and 2023. In 2023, the company generated $0.59 in sales for every dollar of total assets. This suggests that Arista Networks has been efficient in generating revenue relative to its overall asset base.
Overall, while the fixed asset turnover ratio indicates a relatively high efficiency in utilizing fixed assets, the total asset turnover ratio shows that the company's overall asset management has improved in recent years. It is essential for Arista Networks to continue monitoring and optimizing its asset utilization to sustain and enhance operational efficiency.