Extreme Networks Inc (EXTR)

Short-term

Turnover ratios

Activity ratios are important indicators of how efficiently a company manages its resources and assets to generate revenue. Let's analyze the activity ratios of Extreme Networks Inc over the past five years:

1. Inventory Turnover:
The inventory turnover ratio measures how effectively a company is managing its inventory levels. A higher ratio indicates that the company is selling its inventory quickly. Extreme Networks Inc's inventory turnover has fluctuated over the past five years, ranging from 6.89 to 23.64. The lower turnover in recent years could suggest that the company may have excess inventory on hand, which could potentially tie up capital.

2. Receivables Turnover:
The receivables turnover ratio reflects how quickly the company collects payments from its customers. Extreme Networks Inc's receivables turnover has varied over the years, with the highest being 12.49. A higher turnover ratio indicates that the company is efficient in collecting payments from customers. However, the ratio has been inconsistent, which may indicate changes in the company's credit policies or customer payment patterns.

3. Payables Turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. Extreme Networks Inc's payables turnover has also fluctuated, with the highest being 18.90. A higher turnover ratio implies that the company is efficiently managing its payables. The varying ratios over the years could reflect changes in the company's payment terms or supplier relationships.

4. Working Capital Turnover:
The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales. Extreme Networks Inc's working capital turnover has been high in some years, indicating efficient utilization of working capital to generate revenue. However, the ratio was missing for certain years, making it difficult to analyze the trend accurately.

In conclusion, Extreme Networks Inc's activity ratios show fluctuations over the past five years, signaling potential changes in how the company manages its inventory, receivables, payables, and working capital. Further analysis and comparison with industry benchmarks could provide valuable insights into the company's operational efficiency and overall financial performance.

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Average number of days

Extreme Networks Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- Extreme Networks Inc held inventory for an average of 52.96 days in 2024, significantly higher than in the previous years. This could indicate potential issues with inventory management, such as overstocking or slow-moving inventory.
- The increasing trend in DOH implies that the company is tying up more cash in inventory, which may lead to higher holding costs and reduced liquidity.

2. Days of Sales Outstanding (DSO):
- Extreme Networks Inc took 29.23 days on average to collect its receivables in 2024, a notable improvement from the prior years. This suggests a more efficient credit and collection process.
- The decreasing trend in DSO indicates that the company is collecting receivables more quickly, resulting in faster cash conversion and improved working capital management.

3. Number of Days of Payables:
- Extreme Networks Inc took 19.31 days to pay its suppliers on average in 2024, a decrease from the prior year. This indicates that the company is paying its bills more promptly.
- The declining trend in days of payables suggests that Extreme Networks is managing its payables effectively, potentially benefiting from favorable credit terms or strong supplier relationships.

Overall, Extreme Networks Inc has shown mixed performance in its activity ratios, with improvements in DSO and payables, but a significant increase in DOH. The company should continue to monitor and optimize its inventory management practices to enhance efficiency and financial performance.

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Long-term

The fixed asset turnover ratio for Extreme Networks Inc has been fluctuating over the past five years, ranging from 15.74 in 2020 to 27.90 in 2023, with a high of 27.90 in 2023. This ratio indicates how efficiently the company is using its fixed assets to generate sales. A higher fixed asset turnover ratio suggests that Extreme Networks Inc is generating more revenue per dollar invested in fixed assets.

On the other hand, the total asset turnover ratio has also varied over the years, with a low of 0.95 in 2020 to a high of 1.14 in 2023. This ratio measures the company's ability to generate sales from its total assets. A higher total asset turnover ratio indicates that the company is effectively utilizing its total assets to generate revenue.

Overall, Extreme Networks Inc's long-term activity ratios show that the company has been improving its efficiency in utilizing both fixed assets and total assets to generate sales over the years, with a notable increase in asset turnover ratios from 2020 to 2023. This trend indicates positive operational performance and effective asset management strategies within the company.