Ciena Corp (CIEN)
Payables turnover
| Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | Oct 31, 2017 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 2,507,700 | 2,072,320 | 1,898,700 | 1,879,270 | 1,555,900 |
| Payables | US$ in thousands | 317,828 | 516,047 | 356,176 | 291,904 | 260,098 |
| Payables turnover | 7.89 | 4.02 | 5.33 | 6.44 | 5.98 |
October 28, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $2,507,700K ÷ $317,828K
= 7.89
The payables turnover ratio measures how efficiently a company is managing its accounts payable by assessing how many times during a period the company pays off its suppliers. A higher payables turnover ratio suggests that the company is paying its suppliers more frequently, which can indicate strong liquidity and efficient management of working capital.
Analyzing CIENA Corp.'s payables turnover over the past five years, we observe a steady increase from 5.89 in 2019 to 7.89 in 2023. This indicates that the company has been paying its suppliers at an increasingly faster rate over the years.
A rising payables turnover ratio can signify that CIENA Corp. has been managing its accounts payable more effectively, potentially negotiating better payment terms with suppliers or implementing more efficient internal processes. It may also indicate an improvement in the company's liquidity position.
However, it's essential to consider the context of the industry and the company's specific operations when interpreting the payables turnover ratio. For instance, a significantly high payables turnover ratio relative to industry peers might suggest aggressive payment practices that could strain supplier relationships.
Overall, the increasing trend in CIENA Corp.'s payables turnover ratio suggests a positive development in its management of accounts payable and working capital efficiency. Nonetheless, it's important to conduct further analysis and compare this ratio with industry benchmarks to gain a more comprehensive understanding of the company's financial performance.
Peer comparison
Oct 28, 2023