NetApp Inc (NTAP)

Short-term

Turnover ratios

NetApp Inc's activity ratios provide insight into how efficiently the company manages its resources and operates its core business activities.

1. Inventory turnover: NetApp Inc's inventory turnover has fluctuated over the periods analyzed, ranging from 18.85 to 38.68. A higher inventory turnover indicates that the company is selling its products quickly, which is generally favorable as it reduces the risk of obsolete inventory and indicates efficient operations. NetApp Inc's inventory turnover has been relatively stable and in line with industry standards.

2. Receivables turnover: The receivables turnover ratio reflects NetApp Inc's ability to collect credit sales from its customers. The company's receivables turnover has varied between 5.08 and 10.79. A higher turnover ratio suggests that NetApp Inc is collecting its accounts receivable efficiently. The fluctuations in receivables turnover may be due to changes in the company's credit policies or the creditworthiness of its customers.

3. Payables turnover: The payables turnover ratio indicates how quickly NetApp Inc pays its suppliers. The company's payables turnover has ranged between 6.63 and 12.97. A higher payables turnover suggests that NetApp Inc is managing its accounts payable effectively. Consistently high payables turnover may indicate strong negotiation power with suppliers or efficient cash management practices.

4. Working capital turnover: The working capital turnover ratio measures how efficiently NetApp Inc utilizes its working capital to generate sales. The company's working capital turnover has varied from 2.22 to 23.22. A higher turnover ratio indicates that NetApp Inc is effectively utilizing its current assets to support its revenue generation. The fluctuation in this ratio may be attributed to changes in the company's operating cycle or working capital management strategies.

Overall, NetApp Inc's activity ratios reflect a mixed performance in managing its operational activities. The company appears to have maintained relatively stable performance in inventory turnover and payables turnover, indicating efficient operations and cash flow management. However, fluctuations in receivables turnover and working capital turnover suggest potential areas for improvement in managing accounts receivable and working capital efficiency.

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Average number of days

NetApp Inc's days of inventory on hand (DOH) have shown some fluctuation over the periods analyzed, ranging from a low of 9.44 days to a high of 19.37 days. A decreasing trend in DOH indicates the company is selling inventory more quickly, which can be a positive sign of efficient inventory management.

In contrast, NetApp's days of sales outstanding (DSO) have also varied, with values ranging from 33.82 days to 71.89 days. A lower DSO is generally preferred as it indicates a faster collection of accounts receivable, thus improving cash flow.

The number of days of payables for NetApp has displayed some inconsistency, fluctuating between 28.14 days and 55.06 days. A longer period of payables suggests the company is taking longer to pay its suppliers, potentially improving its cash conversion cycle.

Overall, NetApp Inc's activity ratios indicate a mix of efficiency in managing inventory, collecting receivables, and paying suppliers. Further analysis and comparisons with industry benchmarks could provide additional insights into the company's operational effectiveness.

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Long-term

NetApp Inc's fixed asset turnover ratio has been relatively stable over the past two years, ranging between 9.57 and 10.93. This indicates that the company generates revenue efficiently from its investment in fixed assets. The consistent high fixed asset turnover suggests that NetApp is effectively utilizing its property, plant, and equipment to generate sales.

On the other hand, the total asset turnover ratio has fluctuated within a narrower range of 0.61 to 0.74 over the same period. This ratio reflects how efficiently the company uses all its assets to generate revenue. The trend shows slight variability, indicating that NetApp's ability to generate sales from its total assets has been somewhat inconsistent.

While the fixed asset turnover ratio consistently remained at a high level, the total asset turnover ratio displayed more variability. This suggests that NetApp may have room for improvement in optimizing the utilization of all its assets to generate revenue effectively. Further analysis of the company's operational efficiency and asset management practices could provide insight into enhancing overall performance in this area.