Arrow Electronics Inc (ARW)

Days of Sales Outstanding (DSO) is a financial ratio that measures the average number of days it takes for a company to collect revenue after making a sale. A higher DSO value indicates slower collections and potentially a higher risk of bad debts, while a lower value suggests efficient collection practices.

Analyzing the DSO trend for Arrow Electronics Inc. over the past five years, we observe a generally increasing trend, with DSO values of 134.92 days in 2023, 121.15 days in 2022, 117.77 days in 2021, 117.18 days in 2020, and 107.07 days in 2019. This indicates a potential issue in the company's accounts receivable management.

The increase in DSO from 107.07 days in 2019 to 134.92 days in 2023 is concerning as it implies that Arrow Electronics Inc. is taking longer to collect its sales revenue. This could lead to cash flow issues and impact the company's liquidity and working capital management.

It is essential for Arrow Electronics Inc. to closely monitor its accounts receivable collection processes and possibly implement measures to improve efficiency in collecting payments from customers. This could involve tightening credit terms, improving invoicing procedures, or enhancing collections efforts to reduce the DSO to a more optimal level.

Overall, the increasing trend in DSO for Arrow Electronics Inc. highlights the importance of effective accounts receivable management to ensure the company's financial health and operational efficiency.

Peer comparison

Dec 31, 2023