Avnet Inc (AVT)

Short-term

Turnover ratios

The activity ratios of Avnet Inc., as of the provided data, highlight several trends over the period from June 30, 2021, to June 30, 2025.

Inventory Turnover: This ratio shows a declining trend, decreasing from 5.34 in 2021 to 3.78 in 2025. This decline suggests that the company is taking longer to sell its inventory, which could indicate excess inventory, reduced demand, or shifts in inventory management efficiency.

Receivables Turnover: The receivables turnover ratio fluctuated slightly but remained relatively stable, with a minor overall increase from 5.46 in 2021 to 5.13 in 2025. This stability implies that the company's collection efforts have maintained a consistent pace, with no significant improvement or deterioration in receivables management.

Payables Turnover: The payables turnover ratio decreased from 7.20 in 2021 to 5.68 in 2025. This decline indicates that Avnet is taking longer to pay its suppliers, which may reflect changes in cash flow management, negotiations for extended payment terms, or strategic delaying of payments.

Working Capital Turnover: The ratio decreased from 4.76 in 2021 to 3.77 in 2025. A declining working capital turnover may suggest that the company is generating less sales per unit of working capital, potentially indicating reduced operational efficiency or increased investment in working capital needs.

In summary, these activity ratios collectively depict a trend toward reduced operational efficiency over the analyzed period. The decreasing inventory turnover and working capital turnover point to potential challenges in efficiently managing inventory and working capital. The stabilization of receivables turnover indicates relatively consistent receivables management, while the declining payables turnover suggests a shift towards longer supplier payment cycles.

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Average number of days

The analysis of Avnet Inc's activity ratios over the period from June 2021 to June 2025 reveals notable trends in inventory management, receivables collection, and payables period.

Starting with days of inventory on hand (DOH), there has been a consistent increase over the analyzed period. In June 2021, the company held inventory for approximately 68.32 days. By June 2022, this had risen slightly to 72.57 days, and the trend continued, reaching 85.41 days in June 2023. The increase persisted further, with inventories remaining in hand for about 95.09 days in June 2024, and reaching approximately 96.44 days by June 2025. This upward trend suggests that Avnet has been holding inventory for progressively longer periods, which may indicate a buildup of stock levels, possibly in response to changes in supply chain conditions, demand forecasting, or strategic inventory positioning.

Regarding days of sales outstanding (DSO), the period shows relatively relative stability with minor fluctuations. In June 2021, DSO was approximately 66.82 days. It decreased slightly in June 2022 to 64.58 days, then increased marginally to 65.52 days by June 2023. The trend continued upward modestly, reaching 67.47 days in June 2024, and further increasing to 71.15 days by June 2025. The overall rising trend indicates a gradual lengthening of the accounts receivable collection period, which could reflect changes in credit policies, customer payment behaviors, or shifts in the sales mix.

Lastly, the number of days of payables has shown a pattern of fluctuation with an overall increasing trend. It was approximately 50.68 days in June 2021, increased to 58.68 days by June 2022, then slightly decreased to 52.73 days in June 2023. Subsequently, it increased again to 58.17 days in June 2024, and extended further to 64.24 days in June 2025. This pattern suggests that Avnet has been extending its payment terms with suppliers over time, managing its cash flows by delaying payments relative to its purchases.

In summary, Avnet's activity ratios reflect a pattern of increasing inventory holding periods, lengthening receivables collection cycles, and extending payable durations. Together, these trends indicate a strategic shift towards more extended working capital cycles, which may impact liquidity management and operational efficiency.

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Long-term

The analysis of Avnet Inc.'s long-term activity ratios reveals significant insights into the company’s utilization of its assets over the specified periods.

The Fixed Asset Turnover ratio demonstrates a notable upward trajectory, increasing from 15.40 times as of June 30, 2021, to 44.83 times by June 30, 2022, and further rising sharply to 60.10 times as of June 30, 2023. This substantial improvement indicates that the company has enhanced its efficiency in generating sales from its fixed assets during this period. The steep increase suggests either a major improvement in asset utilization, an increase in sales volume relative to fixed assets, or both, highlighting a more effective deployment of property, plant, and equipment.

For the subsequent years (2024 and 2025), the ratio data are not available, precluding analysis beyond 2023. However, the trend from 2021 to 2023 indicates a strong positive trajectory in fixed asset utilization efficiency.

In contrast, the Total Asset Turnover ratio displays a more moderate trend over the same period, starting at 2.19 times as of June 30, 2021, rising slightly to 2.34 in 2022, then declining marginally to 2.13 in 2023. The subsequent projections for 2024 and 2025 further suggest a gradual decrease to 1.95 and then to 1.83, respectively. This pattern indicates that while overall asset utilization improved slightly in 2022, it has been declining thereafter, implying that the company might be experiencing challenges in maintaining overall efficiency in generating sales from its total assets.

In summary, while Avnet Inc. has demonstrated remarkable efficiency gains in its fixed asset management between 2021 and 2023, the overall asset turnover ratio signals a more cautious picture of asset utilization efficiency. The divergence suggests that enhancements in fixed asset management have not necessarily translated into proportional gains across total assets, possibly due to shifts in asset composition or operational changes. The decline in total asset turnover in recent years may point to increased asset base without a commensurate increase in sales, indicating potential areas for operational improvement or strategic asset management.