Cisco Systems Inc (CSCO)

Activity ratios

Short-term

Turnover ratios

Jul 31, 2024 Jul 27, 2024 Jul 31, 2023 Jul 29, 2023 Jul 31, 2022
Inventory turnover 5.63 10.02 5.83 9.44 7.52
Receivables turnover 5.37 6.13
Payables turnover 14.66 14.88
Working capital turnover 4.73 4.71 4.65

Activity ratios provide insights into how efficiently a company manages its assets, collects receivables, and pays its liabilities. Let's analyze the activity ratios of Cisco Systems Inc based on the provided data:

1. Inventory Turnover:
- Cisco's inventory turnover ratio fluctuated over the years, indicating variations in how quickly the company sold its inventory. The ratios ranged from 5.63 to 10.02 times during the period.
- A higher inventory turnover ratio implies that Cisco was able to sell its products more efficiently, reducing excess inventory holding costs and potential obsolescence risks.

2. Receivables Turnover:
- Cisco's receivables turnover ratio shows how many times the company collected its accounts receivable during the period. The data shows values of 6.13 and 5.37 for the available years.
- A higher receivables turnover ratio suggests that Cisco efficiently collected payments from its customers, managing its credit policies effectively.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly Cisco paid its suppliers. The data presents values of 14.88 and 14.66 for the respective years.
- A higher payables turnover ratio indicates that Cisco was prompt in paying its bills, potentially benefiting from discounts and maintaining good relationships with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently Cisco utilized its working capital to generate revenue. The provided data includes values of 4.65, 4.71, and 4.73 for different years.
- A higher working capital turnover ratio suggests that Cisco effectively utilized its resources to drive sales and operations.

Overall, analyzing these activity ratios can help stakeholders understand Cisco Systems Inc's operational efficiency, inventory management, accounts receivable collection, payables management, and working capital utilization. It is crucial for investors and analysts to track these ratios over time to assess the company's financial health and performance.


Average number of days

Jul 31, 2024 Jul 27, 2024 Jul 31, 2023 Jul 29, 2023 Jul 31, 2022
Days of inventory on hand (DOH) days 64.88 36.44 62.61 38.66 48.54
Days of sales outstanding (DSO) days 67.92 59.58
Number of days of payables days 24.89 24.54

Based on the provided data for Cisco Systems Inc, let's analyze the activity ratios:

1. Days of Inventory on Hand (DOH):
- In July 2022, Cisco had an inventory holding period of 48.54 days, which decreased to 38.66 days in July 2023, indicating an improvement in inventory management efficiency.
- However, in July 2023, the DOH increased significantly to 62.61 days before decreasing again to 36.44 days in July 2024. This fluctuation may suggest challenges in managing inventory levels efficiently.
- By July 2024, the DOH increased once more to 64.88 days, indicating a longer time period for which inventory is held before being sold.

2. Days of Sales Outstanding (DSO):
- Data for DSO is incomplete, as there are missing values specified as "— days". This makes it challenging to analyze the trend in receivables collection efficiency.
- In July 2023, the DSO was at 59.58 days, indicating a relatively long period for collecting receivables. Further data is needed to assess if there are improvements or deteriorations in this area over time.
- In July 2024, the DSO reached 67.92 days, which may suggest slower collections or credit terms extended to customers.

3. Number of Days of Payables:
- Similar to DSO, data for the number of days of payables is incomplete with values indicated as "— days". This limits the ability to analyze the trend in payables turnover.
- In July 2023, the days of payables were at 24.54 days; however, without data for other periods, it is challenging to gauge the efficiency of Cisco's payables management.
- In July 2024, the days of payables increased slightly to 24.89 days, indicating a relatively stable period for paying off liabilities to suppliers.

In conclusion, while the analysis of Cisco Systems Inc's activity ratios provides some insights into inventory, receivables, and payables management, the incomplete data for certain periods limits the comprehensive evaluation of the company's operational efficiency over time. Further data and analysis would be required to draw more definitive conclusions regarding Cisco's activity ratios and working capital management.


See also:

Cisco Systems Inc Short-term (Operating) Activity Ratios


Long-term

Jul 31, 2024 Jul 27, 2024 Jul 31, 2023 Jul 29, 2023 Jul 31, 2022
Fixed asset turnover 25.77 27.34 27.19 25.82
Total asset turnover 0.43 0.43 0.56 0.56 0.55

Long-term activity ratios, such as Fixed Asset Turnover and Total Asset Turnover, provide insights into how effectively Cisco Systems Inc is utilizing its assets to generate sales.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how efficiently a company is using its fixed assets to generate revenue. A higher ratio indicates better utilization of fixed assets.
- Cisco's Fixed Asset Turnover ratio has been consistently high over the years, ranging from 25.82 in July 2022 to 27.34 in July 2023. However, it slightly decreased to 25.77 in July 2024.
- This suggests that Cisco is effectively using its fixed assets to generate sales, which is a positive sign for the company's operational efficiency.

2. Total Asset Turnover:
- The Total Asset Turnover ratio indicates how efficiently a company is using all its assets to generate sales. A higher ratio implies better asset utilization.
- Cisco's Total Asset Turnover ratio has remained relatively stable, ranging from 0.55 in July 2022 to 0.43 in July 2024.
- The decrease in the Total Asset Turnover ratio from 2022 to 2024 may imply that Cisco's sales growth has not kept pace with the growth in total assets during this period.

Overall, Cisco Systems Inc has shown strong efficiency in utilizing its fixed assets to generate sales, as reflected in its high Fixed Asset Turnover ratio. However, the stability and slight decrease in the Total Asset Turnover ratio suggest that the company may need to focus on increasing sales relative to its total assets to enhance overall asset efficiency.


See also:

Cisco Systems Inc Long-term (Investment) Activity Ratios