Viavi Solutions Inc (VIAV)
Activity ratios
Short-term
Turnover ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.40 | 4.02 | 4.71 | 5.11 | 5.65 |
| Receivables turnover | 4.08 | 4.19 | 4.52 | 4.35 | 4.42 |
| Payables turnover | 8.42 | 9.90 | 8.90 | 7.67 | 8.89 |
| Working capital turnover | 1.59 | 1.84 | 2.03 | 3.29 | 1.67 |
Viavi Solutions Inc's activity ratios indicate the efficiency of the company in managing its working capital components.
1. Inventory turnover:
- The inventory turnover ratio has seen fluctuations over the past five years, with a decrease from 5.65 in 2020 to 4.40 in 2024.
- This indicates that Viavi Solutions Inc took around 4.40 days to sell and replace its inventory in 2024, which is slightly slower compared to previous years.
2. Receivables turnover:
- The receivables turnover ratio has also fluctuated over the years, with a slight decrease from 4.42 in 2020 to 4.08 in 2024.
- This implies that the company collected its accounts receivable approximately every 4.08 days in 2024, which is slightly slower compared to the previous years.
3. Payables turnover:
- The payables turnover ratio has been inconsistent, with a significant decrease from 9.90 in 2023 to 8.42 in 2024.
- This suggests that Viavi Solutions Inc took around 8.42 days to pay off its suppliers in 2024, indicating a decrease in the speed of payments compared to the previous year.
4. Working capital turnover:
- The working capital turnover ratio has also shown variability, with a decrease from 3.29 in 2021 to 1.59 in 2024.
- This indicates that the company generated revenue approximately 1.59 times for every dollar of working capital in 2024, reflecting a decrease in working capital efficiency compared to the previous years.
Overall, the activity ratios suggest that Viavi Solutions Inc may need to focus on improving its inventory management, accounts receivable collection, and payment to suppliers to enhance its overall working capital efficiency.
Average number of days
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 82.97 | 90.68 | 77.45 | 71.49 | 64.55 |
| Days of sales outstanding (DSO) | days | 89.35 | 87.08 | 80.72 | 83.91 | 82.52 |
| Number of days of payables | days | 43.34 | 36.87 | 41.01 | 47.61 | 41.07 |
Activity ratios such as Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables provide insights into how effectively Viavi Solutions Inc manages its assets and liabilities related to its operational activities.
1. Days of Inventory on Hand (DOH): Viavi Solutions Inc's inventory turnover has been increasing over the past five years, indicating that the company has been more efficient in managing its inventory levels. A higher DOH means that the company is holding inventory for a longer period, which could tie up capital and increase storage costs. The upward trend in DOH from 64.55 days in 2020 to 82.97 days in 2024 may suggest the need to optimize inventory management to reduce holding costs and improve cash flow.
2. Days of Sales Outstanding (DSO): The DSO ratio measures the average number of days it takes for the company to collect its accounts receivable. Viavi Solutions Inc's DSO has fluctuated over the years but has generally been decreasing, which suggests that the company has been improving its collection efficiency. A lower DSO indicates faster cash conversion and better liquidity. The decrease in DSO from 82.52 days in 2020 to 89.35 days in 2024 could indicate a need for enhanced credit management practices to accelerate cash inflows.
3. Number of Days of Payables: The number of days of payables shows how long it takes for Viavi Solutions Inc to pay its suppliers. The increase in the number of days of payables from 41.07 days in 2020 to 43.34 days in 2024 suggests that the company is taking longer to settle its payables. While extending payment terms can benefit cash flow in the short term, it may strain relationships with suppliers if not managed effectively. Viavi Solutions Inc should monitor its payables carefully to maintain good supplier relations while optimizing cash flow.
In conclusion, Viavi Solutions Inc has shown improvements in managing its inventory and collections, as indicated by decreasing DSO and increasing DOH ratios. However, the trend of increasing payables days should be monitored to ensure a balance between optimizing working capital and maintaining strong vendor relationships.
Long-term
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.38 | 4.55 | 5.65 | 6.12 | 6.59 |
| Total asset turnover | 0.58 | 0.60 | 0.71 | 0.61 | 0.64 |
The fixed asset turnover ratio measures the efficiency of Viavi Solutions Inc in generating sales revenue from its fixed assets. The trend shows a decreasing pattern over the past five years, from 6.59 in 2020 to 4.38 in 2024. This indicates that the company is generating less revenue from its investment in fixed assets over time.
On the other hand, the total asset turnover ratio reflects Viavi Solutions Inc's ability to generate sales revenue from all its assets. The trend fluctuates but remains relatively stable, with a slight increase from 0.60 in 2023 to 0.58 in 2024. This suggests that the company's overall asset utilization efficiency has remained fairly consistent over the years.
In conclusion, Viavi Solutions Inc's fixed asset turnover has been declining, while its total asset turnover has remained relatively stable. The company may need to reassess its fixed asset utilization strategies to improve efficiency and profitability in the long term.