Ciena Corp (CIEN)
Activity ratios
Short-term
Turnover ratios
Nov 2, 2024 | Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | |
---|---|---|---|---|---|
Inventory turnover | 2.80 | 2.39 | 2.19 | 5.07 | 5.46 |
Receivables turnover | 4.21 | 4.23 | 3.84 | 4.01 | 4.76 |
Payables turnover | 5.42 | 7.89 | 4.02 | 5.33 | 6.44 |
Working capital turnover | 1.58 | 1.66 | 1.55 | 1.59 | 1.91 |
Ciena Corp's activity ratios provide insights into how effectively the company is managing its assets and liabilities to generate revenue.
1. Inventory Turnover:
- The inventory turnover ratio has been fluctuating over the years, indicating variations in how efficiently the company is managing its inventory levels.
- A higher inventory turnover ratio in 2020 and 2021 suggests that Ciena Corp was selling inventory quickly during those years compared to 2022 and 2023.
- The decline in the ratio in recent years may imply that the company is either holding more inventory or facing challenges in selling its products.
2. Receivables Turnover:
- Ciena Corp's receivables turnover ratio has been relatively consistent over the past five years, indicating stability in the company's collection of receivables.
- A consistent ratio implies that the company is efficient in collecting payments from its customers within a reasonable timeframe.
3. Payables Turnover:
- The payables turnover ratio has shown some fluctuations, indicating changes in how quickly Ciena Corp is paying off its suppliers.
- A higher payables turnover ratio in 2019 and 2021 suggests that the company paid its suppliers more rapidly during those years compared to 2020 and 2022.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently Ciena Corp is utilizing its working capital to generate revenue.
- The declining trend in the ratio over the years may indicate a decrease in the company's ability to convert working capital into sales efficiently.
In conclusion, Ciena Corp should monitor its activity ratios closely to ensure optimal management of its assets and liabilities for enhanced operational efficiency and financial performance.
Average number of days
Nov 2, 2024 | Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | ||
---|---|---|---|---|---|---|
Days of inventory on hand (DOH) | days | 130.46 | 152.95 | 166.75 | 71.95 | 66.89 |
Days of sales outstanding (DSO) | days | 86.78 | 86.31 | 94.93 | 91.07 | 76.61 |
Number of days of payables | days | 67.33 | 46.26 | 90.89 | 68.47 | 56.69 |
Ciena Corp's activity ratios provide insight into the efficiency and effectiveness of its inventory management, accounts receivable collection, and accounts payable processes over the past five years.
1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, Ciena holds inventory before selling it. A decreasing trend in DOH from 2020 to 2021 indicates that the company has been managing its inventory more efficiently, reducing the number of days it takes to turn inventory into sales. However, there has been an increasing trend since 2021, reaching a peak of 166.75 days in 2022 before slightly decreasing in 2023 and 2024. This suggests potential issues with inventory management that may need to be addressed to optimize working capital and cash flow.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days Ciena takes to collect payment from its customers after making a sale. The relatively stable DSO over the years, with minor fluctuations, indicates that the company has been consistent in its accounts receivable collection process. However, the DSO in 2022 was higher compared to previous years, which suggests a possible delay in collecting payments from customers that could impact cash flow.
3. Number of Days of Payables: This ratio measures how long Ciena takes to pay its suppliers. The trend in days of payables has been fluctuating over the years, with a significant increase in 2022 compared to the previous year. This increase could indicate a change in the company's payment policies or relationships with suppliers. Managing payables effectively can help improve cash flow by extending payment terms while maintaining good supplier relationships.
Overall, Ciena Corp may need to focus on improving its inventory management to reduce days on hand and enhancing collections from customers to optimize cash flow and working capital efficiency. Additionally, monitoring payables and maintaining balance in payment terms with suppliers is crucial for maintaining healthy financial operations.
Long-term
Nov 2, 2024 | Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | |
---|---|---|---|---|---|
Fixed asset turnover | 13.19 | 18.10 | 16.16 | 15.55 | 16.10 |
Total asset turnover | 0.71 | 0.78 | 0.72 | 0.74 | 0.84 |
The long-term activity ratios of Ciena Corp, as indicated by the fixed asset turnover and total asset turnover ratios, have displayed fluctuating trends over the past five years.
The fixed asset turnover ratio has shown a decreasing pattern from 16.10 in 2020 to 13.19 in 2024. This suggests that Ciena Corp is generating less revenue from its fixed assets compared to previous years, indicating a potential decrease in the efficiency of utilizing its long-term assets to generate sales.
On the other hand, the total asset turnover ratio has experienced varying levels of fluctuations over the same period, with a general decreasing trend from 0.84 in 2020 to 0.71 in 2024. This indicates that Ciena Corp is generating lower sales relative to its total assets, implying a decline in the company's overall efficiency in generating sales revenue from its total asset base.
Overall, the analysis of both the fixed asset turnover and total asset turnover ratios suggests that Ciena Corp may need to improve its asset utilization efficiency to enhance its long-term operational performance and profitability.