Arista Networks (ANET)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	216.80	220.35	238.43	262.48	255.26	254.92	263.72	257.77	220.48	207.11	179.90	162.01	161.89	154.98	154.60	146.99	154.77	148.37	108.92	85.24
Days of sales outstanding (DSO)	days	59.44	62.42	70.95	65.44	63.82	54.36	54.08	64.86	76.90	60.51	61.05	74.98	63.95	52.09	50.57	56.40	61.35	49.32	61.49	54.87
Number of days of payables	days	45.04	36.00	38.31	28.94	57.09	36.21	49.78	50.58	39.76	52.40	58.03	47.77	50.46	36.41	41.31	41.64	43.31	55.24	40.93	27.62
Cash conversion cycle	days	231.21	246.77	271.07	298.97	261.99	273.07	268.02	272.05	257.62	215.21	182.92	189.22	175.38	170.66	163.86	161.75	172.81	142.46	129.48	112.50

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 216.80 + 59.44 – 45.04
= 231.21

The cash conversion cycle of Arista Networks, a measure of the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales, has been fluctuating over the past few years.

From March 31, 2020, to December 31, 2024, the cash conversion cycle has shown a general increasing trend. It started at 112.50 days in March 2020 and peaked at 298.97 days in March 2024, indicating a significant increase in the time it takes for Arista Networks to convert its resources into cash.

There have been some fluctuations within this period, with varying levels of efficiency in managing inventory, sales, and accounts receivable. Notably, the highest cash conversion cycle was recorded in March 2024, indicating potential challenges in efficiently managing and converting assets into cash flows.

Overall, the trend suggests that Arista Networks may be facing challenges in optimizing its working capital management, which could impact its liquidity and profitability in the long run. The company may need to focus on improving its inventory turnover, collection of accounts receivable, and management of accounts payable to shorten the cash conversion cycle and enhance its financial health.