Arrow Electronics Inc (ARW)

Activity ratios

Short-term

Turnover ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover 5.58 5.20 5.73 5.80 6.07 6.29 6.42 6.61 7.20 7.82 7.97 8.33 7.75 7.56 7.10 7.49 7.37 7.43 7.32 7.03
Receivables turnover 2.71 3.24 3.25 — 3.01 — — — 3.10 — — — — — — — — — — —
Payables turnover 2.88 3.32 3.48 3.57 3.09 3.35 3.42 3.37 3.15 3.75 3.80 3.87 3.21 3.57 3.49 3.75 3.64 4.21 4.22 4.35
Working capital turnover 6.44 6.44 5.55 5.68 6.24 6.44 6.69 6.67 7.55 8.03 8.14 7.72 7.13 7.36 7.48 7.66 6.78 6.60 6.32 5.74

Arrow Electronics Inc.'s activity ratios provide valuable insights into its operational efficiency and asset management.

1. Inventory Turnover: Over the past eight quarters, the inventory turnover ratio has shown a gradual decline from 6.61 in Q1 2022 to 5.58 in Q4 2023. This indicates that the company is taking longer to sell its inventory. A lower inventory turnover could suggest either declining sales, inefficient inventory management, or overstocking.

2. Receivables Turnover: The receivables turnover ratio fluctuates over the quarters, ranging from 2.71 in Q4 2023 to 3.45 in Q1 2023. Generally, a higher receivables turnover ratio is preferred as it signifies that the company is efficiently collecting payments from its customers. The recent decline may indicate slower collections or changes in the credit terms offered.

3. Payables Turnover: Arrow Electronics Inc.'s payables turnover ratio has also varied over time, with values between 2.88 to 3.57. A higher payables turnover ratio could indicate that the company is paying its creditors more frequently. This may be a strategic move to negotiate better terms or manage cash flow.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently the company is utilizing its working capital to generate sales. The ratio has remained relatively stable around the 6.00 mark, indicating consistent efficiency in utilizing its current assets to support its operations.

Overall, while Arrow Electronics Inc. has maintained relatively stable working capital turnover, fluctuations in inventory, receivables, and payables turnover ratios suggest the need for closer monitoring of inventory management, receivables collection, and payables handling to improve overall efficiency and liquidity management.

Average number of days

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days 65.38 70.13 63.65 62.94 60.13 58.00 56.90 55.25 50.66 46.68 45.78 43.82 47.09 48.27 51.38 48.73 49.54 49.10 49.85 51.91
Days of sales outstanding (DSO) days 134.92 112.55 112.39 — 121.15 — — — 117.77 — — — — — — — — — — —
Number of days of payables days 126.93 109.81 104.84 102.25 118.25 108.85 106.69 108.37 115.95 97.44 96.01 94.25 113.70 102.18 104.64 97.36 100.39 86.62 86.56 83.86

Arrow Electronics Inc.'s activity ratios reflect how efficiently the company manages its assets and liabilities in generating sales.

- Days of Inventory on Hand (DOH) has increased slightly in the most recent quarter, indicating that inventory turnover has slightly slowed down. The company is holding inventory for about 65 to 70 days before it is sold, which may tie up capital and increase holding costs.

- Days of Sales Outstanding (DSO) have varied over the quarters but generally stayed around 110 to 135 days. This suggests that Arrow Electronics takes about 110 to 135 days on average to collect its accounts receivable. A lower DSO indicates better credit management and faster cash conversion.

- The Number of Days of Payables has decreased over the quarters, showing that Arrow Electronics is taking longer to pay its suppliers. This may indicate a less aggressive approach towards managing payables, potentially straining relationships with suppliers.

Overall, Arrow Electronics Inc. should focus on optimizing its inventory turnover rate and managing its payables more effectively to improve its working capital efficiency and cash flow management.

Long-term

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 62.38 64.49 64.20 63.49 62.24 61.79 57.65 53.43 50.49 48.08 44.86 41.04 35.86 34.71 34.33 35.03 36.01 36.63 36.75 36.55
Total asset turnover 1.52 1.68 1.75 1.81 1.71 1.80 1.81 1.80 1.76 1.95 1.94 1.90 1.68 1.78 1.76 1.83 1.76 1.88 1.87 1.78

Arrow Electronics Inc.'s long-term activity ratios indicate how efficiently the company is utilizing its fixed and total assets to generate sales revenue.

The Fixed Asset Turnover ratio shows that Arrow Electronics Inc. is effectively utilizing its fixed assets to generate sales, with a consistent upward trend from Q1 2022 to Q4 2023. This indicates that the company is efficient in generating sales revenue from its investment in fixed assets such as property, plant, and equipment.

On the other hand, the Total Asset Turnover ratio reveals that Arrow Electronics Inc. is efficiently utilizing all its assets to generate sales revenue, with a slightly fluctuating trend but generally consistent performance over the quarters analyzed. This means that the company is effectively managing its total assets, including both fixed and current assets, to generate sales.

Overall, the trend in both fixed asset turnover and total asset turnover ratios for Arrow Electronics Inc. suggests efficient asset utilization and effective management of assets to generate sales revenue.