Arista Networks (ANET)

Based on the provided liquidity ratios of Arista Networks Inc over the past five years, the company demonstrates consistently strong liquidity positions.

The current ratio, which measures the firm's ability to cover short-term liabilities with its current assets, has ranged between 4.29 and 5.81 over the five-year period, indicating a healthy liquidity position. The current ratio has been above 4 in all years, suggesting that Arista Networks has more than enough current assets to meet its short-term obligations.

Looking at the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, Arista Networks Inc has maintained a strong position with ratios ranging between 3.29 and 5.41. This indicates the company's ability to meet its short-term liabilities even without relying on selling inventory.

Furthermore, the cash ratio, which offers an insight into the company's ability to cover its short-term liabilities with its cash and cash equivalents, has remained robust. The cash ratio ranged between 2.58 and 4.75, suggesting that Arista Networks Inc holds sufficient cash reserves to cover its immediate obligations without relying on other current assets.

In summary, based on the analysis of the liquidity ratios, Arista Networks Inc has consistently maintained strong liquidity positions over the past five years. The company's ability to cover short-term obligations with current assets, excluding inventory, and with cash and cash equivalents demonstrates a sound financial health and prudent management of its liquidity.

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See also:

Arista Networks Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Arista Networks Inc has shown a fluctuating trend over the past five years. The cycle was 123.27 days in 2019, indicating that the company was able to convert its investments in inventory and accounts receivable into cash relatively quickly. However, the cycle increased significantly to 212.24 days in 2020, suggesting a possible slowdown in converting these assets into cash.

In 2021, the cash conversion cycle improved to 216.99 days, although it was still higher compared to the cycle in 2019. This improvement indicates that the company managed its working capital more efficiently. The cycle further increased to 303.13 days in 2022, reflecting a potential challenge in managing cash flows.

The most recent data for 2023 shows a cash conversion cycle of 311.00 days, which is the highest in the five-year period. This prolonged cycle may indicate potential difficulties in converting investments into cash promptly, which could impact the company's liquidity and operational efficiency.

Overall, Arista Networks Inc's cash conversion cycle has shown variability over the years, and it is crucial for the company to closely monitor and manage its working capital to ensure optimal cash flow management and financial performance.