Palo Alto Networks Inc (PANW)

Short-term

Turnover ratios

The activity ratios for Palo Alto Networks Inc. over the analyzed periods exhibit notable trends across inventory turnover, receivables turnover, payables turnover, and working capital turnover, where data is available.

Inventory Turnover:
The company demonstrated no recorded inventory turnover figures from October 2020 through the first half of 2022, indicating that inventory management may not be significant or that inventory levels are minimal or not prominently reported in these periods. Starting from October 2022, inventory turnover rose to approximately 4.72, with subsequent increases observed in early 2023 reaching 5.94, and steady values around 5.97 before slightly decreasing to 5.63 in mid-2023, and then marginally increasing again to 5.84 by October 2023. The increases suggest improved inventory efficiency in managing product stock relative to sales or production levels during this period.

Receivables Turnover:
The receivables turnover ratio shows fluctuations between 5.30 and 5.65 from October 2020 through early 2021, indicating a relatively consistent ability to collect receivables within approximately 65 to 70 days. Thereafter, a decline occurs, notably dropping to 3.43 in July 2021, which indicates longer collection periods upwards of around 106 days, signaling possible collection challenges or changes in customer credit policies. The ratio generally trends upward again, reaching 4.82 in January 2023, then decreasing to 2.42 in July 2023, which signifies slower receivables collection periods of approximately 150 days. Post-2023, the ratio improves to around 3.88 and stabilizes near 3.21–4.28, indicating some recovery in collection efficiency.

Payables Turnover:
The payables turnover ratio experienced notable volatility. It peaked at 25.37 in January 2021, indicating rapid settlement of payables (approximate payment period of about 14 days), then declined substantially to 16.80 in April 2021. Subsequently, significant fluctuations are observed, with the ratio reaching as high as 20.69 in April 2023, and dropping to approximately 9.99–10.93 during other periods, implying variable payment practices or changes in supplier credit terms. A later stabilization around 10.12 in October 2024 and slightly above 10 in subsequent periods suggests a more consistent, moderate pace of accounts payable payments.

Working Capital Turnover:
Limited data is available for working capital turnover, with only two recorded points: 2.15 in October 2020 and 3.52 in April 2021. The increase indicates improved utilization of working capital in generating sales or revenues. The absence of data for subsequent periods restricts comprehensive trend analysis but suggests that during this period, the company enhanced its efficiency in deploying working capital.

Summary:
Overall, the ratios imply a transition period with initial minimal inventory activity, followed by improvements in inventory management. Receivables collection has experienced periods of slowdown, reflecting potential challenges in cash collection or credit management, but shows signs of stabilization in recent periods. Payables management has been variable, with periods of rapid and slow payments, which could reflect strategic decisions in supplier negotiations or liquidity management. The limited working capital data points toward increased efficiency over the short term. These ratios collectively portray a company adjusting its operational efficiencies across crucial working capital components, with recent periods indicating improvements in inventory and receivables management practices.

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Average number of days

The activity ratios of Palo Alto Networks Inc over the observed period reveal variable operational efficiencies across the different metrics.

Days of Inventory on Hand (DOH):
For most of the period, DOH data are unavailable ("— days"), indicating either non-reporting or system gaps. The notable exception is the quarter ending October 31, 2022, when inventory was held for approximately 77.28 days. This period persisted with relatively stable inventory levels, with slight decreases to about 61.47 days in January 2023, followed by minor fluctuations around 61 to 65 days through April and July 2023, before returning to approximately 62.47 days in October 2023. These figures suggest a stable inventory management approach with moderate inventory holding periods.

Days of Sales Outstanding (DSO):
The DSO ratios depict considerable variability, with notable peaks and troughs. Starting at about 68.82 days on October 31, 2020, DSO declines slightly to 64.57 days in January 2021, then fluctuates, reaching a high of approximately 142.15 days in July 2022—indicating extended collection periods during that quarter. Post-2022, there is a decreasing trend, with DSO figures settling somewhat lower yet remaining elevated relative to initial levels, such as 75.78 days in January 2023 and 85.35 days in October 2024. However, the peak in July 2022 points to periods of extended accounts receivable collection cycles, possibly reflecting changes in credit policies, customer mix, or collection efficiency.

Number of Days of Payables:
Payables activity ratios demonstrate variability that indicates fluctuating payment practices. The number of days payables ranged from a low of approximately 14.39 days (January 2021) to a high of about 36.53 days (April 2025). Periods of lengthened payable days, such as 36.08 days in October 2024 and 36.53 days in April 2025, may suggest strategic slowing of payments to conserve cash or negotiation of extended terms with suppliers. Conversely, shorter periods, such as 14.39 days in January 2021 and 17.64 days in April 2023, reflect more prompt payment behavior.

Overall Analysis:
The activity ratios highlight a period of inventory stability after initial reporting gaps, with moderate inventory turnover. The DSO variance signals fluctuating collection cycles, with extended periods during mid-2022, potentially impacting cash flow and working capital management. The payable days' fluctuation indicates flexibility in managing liabilities, with strategic extensions in certain periods to optimize liquidity.

Collectively, these ratios suggest Palo Alto Networks Inc maintained relatively stable operational efficiency with some variability likely driven by strategic financial management decisions, market conditions, or customer and supplier behaviors over the analyzed timeframe.

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See also:

Palo Alto Networks Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The analysis of Palo Alto Networks Inc.’s long-term activity ratios reveals notable trends over the observed periods. The fixed asset turnover ratio exhibits significant variability, increasing from 10.60 on October 31, 2020, to a peak of 19.44 on July 31, 2023, indicating periods of enhanced efficiency in generating sales from fixed assets. However, this ratio shows fluctuations, notably dropping to 7.32 on July 31, 2021, suggesting temporary challenges in asset utilization during that period.

In contrast, the total asset turnover ratio remains relatively stable over time, fluctuating within a narrow range between approximately 0.39 and 0.49. Its upward trend from 0.41 at the end of 2020 to 0.49 in October 2023 suggests a gradual improvement in overall asset utilization efficiency. Nevertheless, the ratio experiences periodic minor declines, such as dropping back to 0.40 or 0.41 at various points, reflecting short-term adjustments or operational variability.

Overall, the increasing trend in fixed asset turnover indicates potential investment in more productive assets or better utilization of existing fixed assets, especially apparent in the period leading up to mid-2023. Meanwhile, the steady yet slightly improving total asset turnover suggests consistent management of overall asset base efficiency, with some exposure to short-term fluctuations. The observed patterns underscore the company’s efforts to optimize asset utilization over time, despite periods of volatility that may be attributable to strategic, operational, or market-related factors.

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See also:

Palo Alto Networks Inc Long-term (Investment) Activity Ratios (Quarterly Data)