Cisco Systems Inc (CSCO)

Short-term

Turnover ratios

The activity ratios of Cisco Systems Inc., based on the provided data, reveal insights into the company's operational efficiency over the periods assessed.

Inventory Turnover:
The inventory turnover ratio indicates how often inventory is sold and replaced within a period. The data shows a gradual decline from approximately 10 times in late 2022 to around 7.27 times by the end of October 2024. This trend suggests a decreasing frequency of inventory liquidation, which could imply longer inventory holding periods or slower sales cycles. Notably, the ratio drops below 8 in early 2024, indicating potential overstocking or a shift in sales dynamics. However, there is a slight uptick to nearly 8 in early 2025, possibly reflecting operational adjustments.

Receivables Turnover:
Receivables turnover measures the efficiency of collection on outstanding customer accounts. The ratio increased from approximately 5.76 times in late 2022 to over 7 times in late 2023, reflecting improved receivables management and faster collection cycles. In early 2024, the ratio decreases to about 6.13, indicating some slowdown, but subsequent data shows a significant rise to approximately 8.45 by mid-2024, marking a notable enhancement in receivables collection efficiency. This upward trend suggests effective credit policies or improved customer payment behaviors.

Payables Turnover:
The payables turnover ratio illustrates how quickly the company pays its suppliers. Starting around 11.29 times in late 2022, the ratio generally trends upward, reaching above 14 times in early 2024, indicating a faster payment cycle. The peak at approximately 14.49 times implies the company was paying its suppliers more frequently or in smaller amounts per cycle. Later, there is a reversal with ratios decreasing to below 8.55 times by April 2025, which could indicate delays in payments, renegotiation of payables, or cash flow constraints. The fluctuations imply ongoing adjustments in the company's management of supplier payments.

Working Capital Turnover:
Working capital turnover reflects how effectively the company utilizes its working capital to generate sales. The data shows modest fluctuations around 4 to 5 times through early 2024. However, a remarkable spike occurs in late 2024, with the ratio reaching approximately 204.53, which is an exceptionally high figure, suggesting either an extraordinary increase in sales relative to working capital or a possible anomaly in reporting. Prior to this, the ratios suggest steady but less aggressive utilization of working capital. The dramatic increase warrants further investigation but indicates a significant change in operational efficiency or reporting metrics.

Summary:
Overall, Cisco's activity ratios depict a picture of evolving operational activity. The inventory turnover rate is decreasing, signaling longer inventory holding periods. Receivables management has improved noticeably, with faster collection cycles contributing positively to liquidity. Payables management has become more aggressive initially but shows signs of lengthening payment periods later. The extraordinary spike in working capital turnover towards the end of the period suggests a substantial shift in how the company leverages its working capital, which may be driven by strategic initiatives or accounting adjustments. These trends collectively reflect a dynamic operational environment that warrants ongoing monitoring to understand the underlying drivers and implications.

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Average number of days

The activity ratios for Cisco Systems Inc., as reflected in the provided data, reveal several notable trends and patterns over the observed periods.

Days of Inventory on Hand (DOH):
The data indicates a gradual increase in inventory holding periods. From October 2022, where the DOH was approximately 37.18 days, there is a steady upward trend culminating in a peak of 57.20 days in July 2025. This indicates that Cisco has been holding inventory for longer durations over time, potentially suggesting slower inventory turnover or changes in inventory management strategy. Such a trend may also reflect caution in inventory management amid fluctuating demand or supply chain considerations, but the overall trajectory points to increasing inventory levels relative to sales.

Days of Sales Outstanding (DSO):
The DSO demonstrates variability but shows a noticeable overall decline from October 2022, where days outstanding were around 63.37 days, to a low of approximately 43.17 days in July 2025. This decreasing trend suggests that Cisco is collecting receivables more quickly over time, improving cash flow efficiency and the effectiveness of credit policies. However, there are beberapa periods of fluctuation, such as an increase during April 2024 to nearly 61.89 days, followed by a recovery to the lower levels observed later.

Number of Days of Payables:
The payables period exhibits more fluctuation but generally remains within a range of approximately 25 to 46 days. Initially, in October 2022, Cisco’s payable days hovered around 32 days, decreasing slightly to roughly 23 to 26 days in early 2024, before increasing again to more than 40 days by April 2025. The longer payable periods in 2025 may suggest an extension of payment terms with suppliers, possibly indicating efforts to manage working capital or respond to liquidity considerations.

Overall Activity Ratios Summary:
The increasing days of inventory suggest longer holding periods which may impact inventory turnover efficiency. Conversely, the decreasing days of sales outstanding imply improved receivables management and faster cash collection. The fluctuations in payables days reflect a possible strategic adjustment in payment policies, balancing supplier relationships and cash flow needs. These combined trends indicate a shift toward optimizing receivables and payables management, albeit with increased inventory holding periods, which could impact overall operational efficiency and working capital management.

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See also:

Cisco Systems Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The long-term activity ratios for Cisco Systems Inc, encompassing Fixed Asset Turnover and Total Asset Turnover, exhibit notable trends over the measured periods.

The Fixed Asset Turnover ratio, which assesses how efficiently the company utilizes its fixed assets to generate sales, demonstrated a generally upward trajectory from October 2022 through late 2023, reaching a peak of approximately 29.72 in October 2023. This indicates a period of improved efficiency in asset utilization concerning fixed assets. However, starting from late 2023 into early 2024, a downward trend is observed, with the ratio declining significantly to around 17.15 in October 2023, and further decreasing to approximately 16.88 by April 2025. The most recent figures suggest a notable reduction in fixed asset efficiency, potentially due to asset disposals, reduced investment, or changes in operational focus.

In parallel, the Total Asset Turnover ratio, which measures overall efficiency in using total assets to generate revenue, has remained relatively stable with minor fluctuations during the same period. Throughout much of 2022 and 2023, it hovered around 0.56 to 0.58, indicating consistent overall asset efficiency. Starting from mid-2023, a slight decline is evident, with values dropping to approximately 0.41 in April 2024, before modestly recovering to about 0.46 by early 2025. This slight decline suggests a decrease in overall asset utilization effectiveness during this timeframe, before stabilization.

These ratios collectively indicate that while Cisco experienced periods of improving efficiency in fixed asset utilization during late 2022 and 2023, recent figures reflect a reduction in asset efficiency. The decline in fixed asset turnover is more pronounced than that of total assets, which may imply strategic shifts such as asset rationalization or operational restructuring, affecting the company's capacity to generate sales per fixed asset unit. The overall stability of total asset turnover suggests that while efficiency has fluctuated, the company's ability to utilize its total asset base to generate revenue has remained relatively consistent, albeit at a lower level than earlier periods.

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See also:

Cisco Systems Inc Long-term (Investment) Activity Ratios (Quarterly Data)