Arista Networks (ANET)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	3,088,570	2,781,440	2,159,460	1,465,750	1,155,330
Inventory	US$ in thousands	1,834,570	1,945,180	1,289,710	650,117	479,668
Inventory turnover		1.68	1.43	1.67	2.25	2.41

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $3,088,570K ÷ $1,834,570K
= 1.68

The inventory turnover for Arista Networks has shown a declining trend over the past few years. In December 31, 2020, the inventory turnover was 2.41, indicating that the company turned over its inventory approximately 2.41 times during that year. However, this ratio decreased to 2.25 by December 31, 2021, further dropping to 1.67 by December 31, 2022. This suggests that Arista Networks took longer to sell off its inventory in 2022 compared to previous years, possibly indicating inefficiencies in inventory management or changes in sales patterns.

By December 31, 2023, the inventory turnover ratio decreased even further to 1.43, reflecting a continued slowdown in inventory turnover. This may signal challenges in managing inventory levels in line with demand or potential obstacles in the sales cycle. Notably, the inventory turnover ratio then increased to 1.68 by December 31, 2024, showing a slight improvement from the previous year but still below the levels seen in earlier periods.

Overall, the declining trend in inventory turnover for Arista Networks raises concerns about the company's inventory management efficiency and its ability to effectively control and sell its stock of goods. It's crucial for the company to closely monitor and address the factors contributing to this downward trend to optimize its inventory turnover and enhance overall operational effectiveness.