Extreme Networks Inc (EXTR)

Short-term

Turnover ratios

The analysis of Extreme Networks Inc.'s activity ratios over the specified periods reveals several notable trends and changes in operational efficiency.

Inventory Turnover:
The inventory turnover ratio declined consistently from 12.90 times on June 30, 2021, to 6.26 times on June 30, 2023, indicating a gradual decrease in the frequency with which inventory is sold and replaced. A further decline to 3.45 times by June 30, 2024, suggests a significant slowdown in inventory turnover, potentially reflecting a buildup of inventory levels or reduced sales efficiency. In the subsequent period, there was a modest improvement to 4.20 times, but the ratio remains below earlier levels, indicating ongoing challenges in inventory management or shifts in sales velocity.

Receivables Turnover:
The receivables turnover ratio exhibits variability, starting at 6.45 times on June 30, 2021, and slightly decreasing to 6.04 times in 2022. A rebound to 7.21 times is observed in 2023, implying improved collection efficiency. However, a marked increase to 12.48 times on June 30, 2024, signifies a substantial enhancement in receivables management—potentially indicating tighter credit policies or faster collections. Subsequently, a decline to 9.00 times in 2025 suggests some easing or normalization but still reflecting relatively efficient receivables management compared to earlier periods.

Payables Turnover:
The payables turnover ratio demonstrates fluctuations across the periods. Initially, it was 7.05 times in 2021, declining slightly to 5.72 times in 2022 and 5.59 times in 2023. The increase to 9.46 times on June 30, 2024, indicates a faster payment cycle, possibly due to improved cash flow management or strategic negotiations with suppliers. A subsequent decrease to 6.74 times in 2025 suggests a moderation in payable payments, aligning closer to prior levels.

Working Capital Turnover:
The working capital turnover ratio shows a notable spike from 31.65 times on June 30, 2021, to an exceedingly high value of 1,997.64 times on June 30, 2023. This dramatic increase suggests a period of extremely efficient utilization of working capital relative to sales or possibly anomalies in calculation or data recording. The absence of figures for subsequent periods limits further trend analysis. The initial high ratio may also reflect a significant reduction in working capital or exceptionally high sales relative to working capital during that period.

Summary:
Overall, Extreme Networks Inc. experienced a consistent decline in inventory turnover, indicating either increased inventory holdings or reduced sales efficiency. Receivables turnover improved markedly in 2024, signaling better collection practices, but fluctuated afterward. Payables turnover initially decreased and then increased sharply in 2024, pointing to shifts in payment strategies. The extraordinary spike in working capital turnover in 2023 warrants further investigation to understand underlying factors. These ratios collectively highlight changes in operational efficiency, asset management, and cash flow management over the analyzed periods.

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Average number of days

The analysis of Extreme Networks Inc.'s activity ratios over the period from June 30, 2021, to June 30, 2025, reveals noteworthy trends and shifts in operational efficiency.

Days of Inventory on Hand (DOH):
The DOH increased substantially over the period, from approximately 28.29 days in 2021 to 105.84 days in 2024. This progression indicates a significant buildup of inventory levels relative to sales, suggesting potential challenges in inventory management or shifts toward maintaining higher stock levels. While there is a slight decrease to 86.88 days in 2025, the overall trend remains elevated compared to 2021, reflecting a sizable change in inventory holding periods.

Days of Sales Outstanding (DSO):
The DSO exhibits more fluctuation, starting at 56.58 days in 2021, rising slightly to 60.41 days in 2022, then decreasing to 50.63 days in 2023. Notably, a sharp decline occurs in 2024 to 29.25 days, indicating an improvement in receivables collection efficiency. However, this metric increases again to 40.57 days in 2025, suggesting some deterioration but still remaining below the levels observed in 2021 and 2022.

Number of Days of Payables:
The days of payables increased from 51.74 days in 2021 to 65.26 days in 2023, then decreased significantly to 38.59 days in 2024, followed by an increase to 54.16 days in 2025. The fluctuations suggest variable payment practices, where Extended periods in 2023 may reflect strategic delays in payments or negotiated terms, while the shorter period in 2024 indicates quicker payables turnover, possibly due to improved cash management or contractual changes.

Overall, the firm's activity ratios demonstrate a trend toward increasing inventory levels and variable receivables and payables cycles. The rising DOH indicates increasing inventory holding periods, which could tie up cash and impact liquidity if not managed effectively. The DSO's decline in 2024 shows improved efficiency in collecting receivables, but the subsequent rise in 2025 warrants attention. Meanwhile, payables show a pattern of fluctuation, impacting the firm's working capital management and supplier relationships.

These dynamics collectively point to a period of operational adjustment, with the company experiencing increased inventory levels, improved receivables collection during 2024, but with ongoing variability in payables management.

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Long-term

The analysis of Extreme Networks Inc.'s long-term activity ratios over the specified periods reveals the following insights:

Fixed Asset Turnover Ratio:
The fixed asset turnover ratio experienced significant growth from June 30, 2021, to June 30, 2023. Specifically, it increased from 10.98 in 2021 to 12.93 in 2022, representing a notable improvement in the efficiency of the company's use of its fixed assets. This upward trend continued markedly in 2023, reaching 28.26, indicating that the company became considerably more effective at generating sales from its fixed assets during this period. The ratio data for 2024 and 2025 are unavailable (denoted as "—"), suggesting that no comparative data were provided, precluding further analysis for those periods. Overall, the upward trajectory up to 2023 suggests enhanced fixed asset management and potentially more productive capital investment.

Total Asset Turnover Ratio:
The total asset turnover ratio showed a steady increase from 1.00 in 2021 to 1.04 in 2022 and further to 1.15 in 2023. This indicates a gradual improvement in the company's efficiency in utilizing its total assets to generate sales. The slight decline observed afterward, with the ratio decreasing to 1.07 in 2024 and further to 0.99 in 2025, signals a slight reduction in asset utilization efficiency. Nonetheless, the ratios across these years remain close to or slightly above 1.0, implying that the company generally maintains a moderate level of asset efficiency.

Summary:
Overall, Extreme Networks Inc. demonstrated substantial improvements in fixed asset utilization efficiency through 2023, while its total asset utilization also improved initially but experienced minor declines in subsequent years. The notable enhancement in fixed asset turnover suggests operational efficiencies or strategic asset management gains that could contribute positively to profitability. The stabilization or slight reduction in total asset turnover in the later years warrants continued monitoring to ensure sustained asset productivity.