Arista Networks (ANET)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 4.36 | 4.38 | 4.29 | 4.34 | 4.99 |
| Quick ratio | 3.46 | 3.14 | 3.05 | 3.54 | 4.25 |
| Cash ratio | 3.04 | 2.61 | 2.34 | 3.07 | 3.74 |
Based on the provided data, we can analyze Arista Networks' liquidity ratios as follows:
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Arista Networks has maintained a consistently high current ratio over the years, with values ranging from 4.29 to 4.99. A current ratio above 1 indicates that the company has more than enough current assets to cover its short-term obligations. Arista Networks' current ratio remaining above 4 signifies a strong liquidity position in the short term.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Arista Networks' quick ratio has also been relatively high, ranging from 3.05 to 4.25. This indicates that the company has a strong ability to meet its short-term obligations without relying on selling inventory.
3. Cash Ratio: The cash ratio is the most conservative liquidity measure, focusing only on cash and cash equivalents relative to current liabilities. Arista Networks' cash ratio has shown a decreasing trend from 3.74 to 2.34 but then slightly improved to 3.04. Despite the dip in the middle years, the cash ratio remains above 1, indicating that the company holds sufficient cash reserves to cover its short-term liabilities.
In conclusion, Arista Networks demonstrates strong liquidity based on its current, quick, and cash ratios. The company maintains a robust ability to meet its short-term obligations and fund its operational needs, as reflected in its high liquidity ratios across the years.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 231.21 | 261.98 | 255.58 | 175.38 | 170.37 |
The cash conversion cycle of Arista Networks has shown some fluctuations over the years. As of December 31, 2020, the company had a cash conversion cycle of 170.37 days, indicating that it took the company approximately 170 days to convert its investments in inventory and accounts receivable into cash.
By December 31, 2021, this cycle had increased slightly to 175.38 days, which may suggest a slight delay in the company's cash conversion process. Further, by December 31, 2022, the cash conversion cycle had significantly lengthened to 255.58 days, indicating a notable increase in the time taken by the company to convert its working capital into cash.
This trend continued into the following years, with the cash conversion cycle reaching 261.98 days by December 31, 2023, and then decreasing to 231.21 days by December 31, 2024. The variations in the cash conversion cycle suggest potential changes in Arista Networks' efficiency in managing its working capital and converting it into cash.
Overall, monitoring and managing the cash conversion cycle is crucial for Arista Networks to ensure optimal liquidity and operational efficiency in the company.