Arista Networks (ANET)
Liquidity ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 4.36 | 4.47 | 4.55 | 5.01 | 4.38 | 4.15 | 4.14 | 3.96 | 4.29 | 4.01 | 3.70 | 3.73 | 4.34 | 5.06 | 5.03 | 5.09 | 4.99 | 5.50 | 5.59 | 5.82 |
| Quick ratio | 3.46 | 3.52 | 3.47 | 3.67 | 3.14 | 2.86 | 2.73 | 2.65 | 3.05 | 2.89 | 2.73 | 2.97 | 3.54 | 4.23 | 4.24 | 4.33 | 4.25 | 4.73 | 4.94 | 5.22 |
| Cash ratio | 3.04 | 3.05 | 2.90 | 3.06 | 2.61 | 2.41 | 2.26 | 2.10 | 2.34 | 2.37 | 2.27 | 2.50 | 3.07 | 3.79 | 3.82 | 3.85 | 3.74 | 4.28 | 4.35 | 4.60 |
Arista Networks' liquidity ratios show a consistent trend over the reporting periods. The current ratio, which measures short-term liquidity using current assets and current liabilities, has been above 4x, indicating a strong ability to cover its short-term obligations. However, there has been a slight decline in the current ratio from 5.82 in March 2020 to 4.36 in December 2024.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also exhibited a decreasing trend from 5.22 in March 2020 to 3.46 in December 2024. This indicates a decrease in the company's ability to meet its short-term obligations without relying on inventory.
The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has shown a similar declining trend from 4.60 in March 2020 to 3.04 in December 2024. Despite the decline, the cash ratio remains at a relatively healthy level, suggesting that Arista Networks has sufficient cash on hand to meet its immediate obligations.
Overall, while Arista Networks' liquidity ratios have shown a declining trend over the years, they still indicate a strong liquidity position with the ability to meet short-term obligations. However, it may be important for the company to monitor its liquidity position closely and take appropriate measures to maintain its financial flexibility.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The cash conversion cycle of Arista Networks, a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuations over the periods analyzed.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 112.50 days to a high of 298.97 days. The trend indicates that the cash conversion cycle initially increased steadily, peaking at 298.97 days before decreasing to 231.21 days by December 31, 2024.
A longer cash conversion cycle may imply that Arista Networks is taking longer to convert its investments into cash, potentially facing challenges in managing its working capital efficiently. On the other hand, a shorter cycle suggests faster conversion and better liquidity management.
Analyzing the factors influencing the cash conversion cycle, Arista Networks should focus on managing inventory levels, optimizing accounts receivable and accounts payable processes, and improving overall operational efficiency to reduce the time it takes to convert investments into cash. Such efforts could help enhance the company's financial health and competitiveness in the market.