F5 Networks Inc (FFIV)

Short-term

Turnover ratios

The activity ratios of F5 Networks Inc provide insights into the efficiency of the company's operations in managing its assets and liabilities.

1. Inventory turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory by indicating the number of times inventory is sold and replaced over a period.
- F5 Networks Inc's inventory turnover has fluctuated over the past five years, with a significant decrease in 2023 followed by a sharp increase in 2024.
- The higher the ratio, the better, as it indicates that F5 Networks Inc is selling its inventory quickly.

2. Receivables turnover:
- The receivables turnover ratio reflects how efficiently the company collects payments from customers on credit sales.
- F5 Networks Inc's receivables turnover has shown variation over the years, but generally remained within a relatively stable range.
- A higher ratio suggests that the company is effective in collecting outstanding receivables in a timely manner.

3. Payables turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers for credit purchases.
- F5 Networks Inc's payables turnover ratios have been fluctuating, indicating changes in the company's payment practices over time.
- A higher ratio implies that the company is efficiently managing its payables and possibly negotiating favorable credit terms with suppliers.

4. Working capital turnover:
- The working capital turnover ratio evaluates how effectively a company utilizes its working capital to generate sales revenue.
- F5 Networks Inc's working capital turnover has varied significantly over the years, with a sharp decline in 2022 followed by a gradual increase.
- A higher ratio indicates that the company is efficiently utilizing its working capital to support its operations and generate revenue.

In summary, F5 Networks Inc's activity ratios reflect fluctuations in the efficiency of its inventory management, receivables collection, payables payment, and working capital utilization over the past five years. These ratios provide valuable insights into the company's operational performance and effectiveness in managing its assets and liabilities.

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Average number of days

The analysis of F5 Networks Inc's activity ratios over the past five years reveals some interesting trends.

1. Days of Inventory on Hand (DOH):
- The DOH ratio measures the number of days the company takes to convert its inventory into sales.
- F5 Networks Inc's DOH has varied significantly over the years, ranging from as low as 4.51 days to as high as 16.48 days.
- The increase in DOH from 2020 to 2024 indicates that the company may be holding more inventory relative to its sales levels. This could tie up working capital and increase carrying costs.

2. Days of Sales Outstanding (DSO):
- The DSO ratio indicates the average number of days it takes for the company to collect revenue after a sale is made.
- F5 Networks Inc's DSO has also fluctuated, with values ranging from 45.79 days to 63.13 days.
- The highest DSO in 2022 suggests that the company took longer to collect its receivables, which could impact its cash flow and liquidity.

3. Number of Days of Payables:
- This ratio shows the average number of days it takes for the company to pay its suppliers.
- F5 Networks Inc's number of days of payables has been relatively stable compared to inventory and receivables, with values ranging from 12.61 days to 23.06 days.
- A lower number of days of payables can indicate a more aggressive payment policy, while a higher number can suggest better cash management.

Overall, F5 Networks Inc's activity ratios reflect fluctuations in its inventory management, accounts receivable collection, and accounts payable practices over the years. Monitoring these ratios can help assess the company's operational efficiency, cash flow management, and working capital needs.

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Long-term

The long-term activity ratios of F5 Networks Inc indicate the efficiency of the company in generating sales revenue relative to its fixed assets and total assets over the past five years.

1. Fixed Asset Turnover:
- F5 Networks Inc's fixed asset turnover has shown a positive trend, increasing steadily from 10.30 in 2020 to 18.70 in 2024.
- This indicates that the company has been able to efficiently utilize its fixed assets to generate sales revenue, with a notable improvement in asset productivity over the years.
- A higher fixed asset turnover ratio suggests that the company is effectively using its fixed assets to generate revenues, which is a positive sign for operational efficiency.

2. Total Asset Turnover:
- The total asset turnover ratio for F5 Networks Inc has fluctuated slightly over the five-year period, ranging from 0.50 in 2020 to 0.54 in 2023 before decreasing to 0.50 in 2024.
- This indicates that the company's ability to generate sales revenue relative to its total assets has shown some variability over the years.
- A total asset turnover ratio below 1 indicates that F5 Networks Inc is generating less in sales revenue compared to its total assets, which may suggest areas where the company can focus on improving operational efficiency.

In conclusion, while the fixed asset turnover ratio of F5 Networks Inc has shown positive growth and efficiency in utilizing fixed assets, the total asset turnover ratio has exhibited some fluctuation, indicating a need for the company to optimize the use of its total assets to enhance overall operational efficiency and profitability.