Fortinet Inc (FTNT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.16 | 11.20 | 13.03 | 12.69 | 13.11 |
| Receivables turnover | 3.73 | 3.42 | 4.09 | 3.60 | 3.95 |
| Payables turnover | 17.00 | 12.17 | 15.44 | 12.53 | 16.04 |
| Working capital turnover | 7.37 | 5.89 | 2.58 | 2.84 | 1.64 |
Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Fortinet Inc over the past five years:
1. Inventory turnover: This ratio measures how many times a company's inventory is sold and replaced during a specific period. Fortinet's inventory turnover has been fluctuating, with a decrease from 4.29 in 2019 to 2.55 in 2023. A lower inventory turnover may indicate overstocking or declining sales efficiency.
2. Receivables turnover: This ratio shows how many times a company collects its accounts receivable in a given period. Fortinet's receivables turnover has been relatively stable, ranging from 3.50 in 2022 to 4.14 in 2021. A higher turnover indicates faster collection of receivables, which is positive for cash flow.
3. Payables turnover: Payables turnover measures how efficiently a company is managing its payables. Fortinet has improved its payables turnover over the years, from 4.03 in 2020 to 6.06 in 2023. A higher payables turnover suggests that the company is paying its creditors more quickly.
4. Working capital turnover: This ratio reflects how effectively a company is utilizing its working capital to generate sales. Fortinet's working capital turnover has shown an increasing trend, reaching 7.48 in 2023 from 1.66 in 2019. A higher working capital turnover indicates that the company is efficiently using its resources to generate revenue.
In summary, Fortinet Inc's activity ratios portray varying levels of efficiency in managing assets and liabilities. While there have been fluctuations in some ratios, overall improvements are seen in payables turnover and working capital turnover, signifying better operational efficiency and resource utilization in recent years.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 50.94 | 32.59 | 28.01 | 28.75 | 27.84 |
| Days of sales outstanding (DSO) | days | 97.84 | 106.76 | 89.16 | 101.51 | 92.34 |
| Number of days of payables | days | 21.47 | 29.98 | 23.65 | 29.12 | 22.76 |
Days of inventory on hand (DOH) measures how many days, on average, the inventory of Fortinet Inc sits in the warehouse before being sold. The trend shows an increase in DOH over the past five years, indicating that the company's inventory turnover has been slowing down and inventory is taking longer to sell.
Days of sales outstanding (DSO) reflects the average number of days it takes for Fortinet Inc to collect payment after making a sale. The DSO has fluctuated over the years but has been relatively stable around the 90-100 day range. A lower DSO is generally more favorable as it indicates faster collections and better cash flow management.
Number of days of payables represents the average number of days Fortinet Inc takes to pay its suppliers. A decreasing trend in payables days indicates that the company is taking longer to pay its bills, which could signal potential liquidity issues or strained supplier relationships.
Overall, Fortinet Inc's activity ratios suggest that the company may be facing challenges in managing its inventory effectively and maintaining optimal payment terms with suppliers. Further analysis and comparison with industry benchmarks would provide more insights into the company's performance in these areas.
See also:
Fortinet Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.01 | 4.80 | 4.81 | 5.78 | 6.25 |
| Total asset turnover | 0.72 | 0.69 | 0.56 | 0.64 | 0.55 |
Fortinet Inc's fixed asset turnover ratio has shown a relatively stable trend over the past five years, ranging from 4.86 to 6.26. This indicates that the company is generating between approximately 4.86 to 6.26 in revenue for every dollar invested in fixed assets.
In contrast, the total asset turnover ratio has also demonstrated stability but at a lower level, fluctuating between 0.55 to 0.73 during the same period. This suggests that the company is generating revenue of between 0.55 to 0.73 for every dollar of total assets owned, implying a lower efficiency in asset utilization compared to fixed assets specifically.
Overall, the fixed asset turnover ratio suggests that Fortinet Inc efficiently utilizes its fixed assets to generate revenue, while the total asset turnover ratio indicates that there may be room for improvement in overall asset utilization efficiency. Further analysis would be necessary to determine the underlying reasons for these trends and identify potential strategies to optimize asset utilization.