Avnet Inc (AVT)

Short-term

Turnover ratios

The activity ratios for Avnet Inc. over the analyzed period reveal several noteworthy trends and characteristics.

Inventory Turnover: The inventory turnover ratio exhibits a declining trend from a high of 5.62 at the end of 2020 to approximately 3.68 by the end of 2024. This decline indicates that the company has been selling and replacing its inventory less frequently over time. A decreasing inventory turnover suggests potential accumulation of inventory, slower sales, or changes in inventory management efficiency. Despite fluctuations, the ratio remains above three, implying the company maintains a moderate level of inventory activity, but the downward trend warrants attention.

Receivables Turnover: This ratio remains relatively stable throughout the period, fluctuating around an average of approximately 5.4 to 5.7. The ratio increased slightly toward the end of 2023 and into 2024, reaching around 5.74 at March 2024 before experiencing minor fluctuations. Consistency in receivables turnover indicates a stable collection period and effective accounts receivable management, with the company collecting receivables approximately every 65 to 70 days on average.

Payables Turnover: The payables turnover ratio shows some variation, generally trending downward from a high of 8.18 at the end of 2020 to levels around 5.51 by the end of 2024. The decline suggests that Avnet is extending its payment period to suppliers, taking longer to settle accounts payable. This could reflect strategic management of cash flows or negotiations with suppliers, but a sustained decrease might also signal potential liquidity considerations.

Working Capital Turnover: The ratio starts at approximately 4.62 at the close of 2020 and demonstrates fluctuating but generally declining levels, reaching around 3.77 by mid-2025. This indicates that Avnet is utilizing its working capital less intensively relative to sales over time. The decreasing trend may point to either a decrease in operational efficiency in utilization of working capital or changes in sales levels relative to working capital investments.

In summary, the activity ratios collectively suggest a trend of declining inventory turnover and working capital efficiency, alongside stable receivables management. The decreasing ratios in inventory and working capital turnover may reflect shifts in inventory and operational practices, possibly a response to market conditions or strategic adjustments. The relatively stable receivables turnover indicates ongoing effective management of receivable collections, while the reduction in payables turnover could highlight extended creditor payables, influencing the overall liquidity dynamics.

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Average number of days

The activity ratios of Avnet Inc., specifically concerning inventory management, receivables collection, and payables payment periods over the provided period, reveal a notable trend and pattern.

Days of Inventory on Hand (DOH):
From September 30, 2020, through June 30, 2021, the DOH decreased from approximately 68.50 days to 61.44 days, indicating a period of inventory optimization. However, thereafter, the ratio experienced a steady elongation, reaching around 78.29 days by December 31, 2022. The upward trend persisted sharply, with DOH extending to over 99 days by December 31, 2024, and slightly fluctuating around 96-97 days in early 2025. This substantial increase suggests that Avnet is holding onto inventory significantly longer, which could imply changes in inventory management strategy, slowing sales, or longer production cycles.

Days of Sales Outstanding (DSO):
DSO fluctuated within a narrow range initially, moving from approximately 61 days on September 30, 2020, to around 66.52 days by March 31, 2021. The ratio demonstrated stability through 2021 and into early 2022, generally averaging around 65-66 days. Starting in mid-2022, the DSO exhibited a slight upward trend, reaching over 72 days by September 2024. The extension indicates a tendency toward lengthening receivables collection periods, possibly reflecting changes in customer credit policies, slower collections, or shifts in sales mix.

Number of Days of Payables:
The payables period initially ranged from 44.60 days in December 2020 to about 50.68 days in June 2021, with a gradual increase observable afterward. Notably, the payables period extended from around 48-50 days in 2021 to over 66 days by December 2024. This indicates that Avnet has been taking longer to settle its payables, potentially reflecting strategic management of its cash flows, negotiating extended credit terms with suppliers, or shifts in payment policies.

Overall Assessment:
The combined analysis shows a consistent trend of increasing inventory holdings, extended collection periods, and lengthening payment cycles from late 2020 through 2024. The elongation of DOH suggests a buildup of inventory, which could be a response to anticipated demand shifts or inefficiencies. The increase in DSO indicates that receivables are being collected more slowly, which may impact liquidity if not managed properly. The lengthening of the payables period supports a possible strategy of optimizing cash flow, though it could also impact supplier relationships if extended excessively.

This pattern reflects a phase of operational change or strategic adjustment, emphasizing longer cycle times across inventory, receivables, and payables, with implications for overall efficiency and liquidity management.

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Long-term

The analysis of Avnet Inc.'s long-term activity ratios from the provided data reveals the following trends:

Fixed Asset Turnover Ratio:
This ratio, which measures how efficiently the company utilizes its fixed assets to generate sales, exhibits significant fluctuation over the examined period. It peaked notably at 71.62 on March 31, 2022, indicating a period of highly efficient utilization of fixed assets. Subsequently, it experienced a downward correction, dropping to 65.83 in the quarter ending March 31, 2023, and further to 60.10 by June 30, 2023. The initial high ratio suggests periods of optimal asset deployment, but the subsequent decline points to decreased efficiency or possible asset underutilization. Data beyond this point are unavailable for subsequent periods.

Total Asset Turnover Ratio:
This ratio, reflecting the overall efficiency in generating sales from total assets, shows a relatively stable but slightly declining trend. Starting at 2.12 on September 30, 2020, it increased modestly to a peak of 2.37 in March 2022, indicating improved overall asset efficiency during that period. From this peak, a gradual decrease occurred, with the ratio falling to approximately 1.83 as of June 30, 2025. This downward trend suggests a diminishing efficiency in asset utilization over the period, possibly due to increased asset base, changes in sales levels, or operational challenges.

In summary, while Avnet's fixed asset turnover experienced notable peaks and declines, its total asset turnover has shown a general decline over time. The fluctuations in fixed asset efficiency indicate periods of optimized asset deployment followed by reduced utilization, whereas the overall asset efficiency has gradually diminished, potentially reflecting broader operational or strategic shifts affecting asset productivity.