Viavi Solutions Inc (VIAV)

Short-term

Turnover ratios

The activity ratios of Viavi Solutions Inc indicate patterns and trends that reflect the company's operational efficiency over the period from September 2020 through June 2025, with partial data available.

Inventory Turnover: The inventory turnover ratio shows a general decline from 5.28 times in September 2020 to a low of approximately 3.77 in December 2023, before rising again to 4.63 by December 2024 and stabilizing around 3.82 to 4.57 into mid-2025. Such fluctuations suggest periods of increased inventory holding perhaps due to supply chain dynamics or product mix changes, followed by periods of increased efficiency in inventory management. The overall declining trend through most of 2021 and 2022 may point to slower inventory sales or higher inventory levels, whereas the subsequent increase indicates potential improvements in turnover efficiency.

Receivables Turnover: Initially decreasing from 5.09 in September 2020 to 4.40 in March 2021, then increasing to a peak of 5.57 in December 2022, the receivables turnover ratio exhibits fluctuation. The ratio generally remains within the range of approximately 3.75 to 5.47 during the observed period. The increase towards late 2022 suggests improved collection efficiency or better credit policies, while declines in 2023 and 2024 could indicate longer collection cycles or changes in customer credit terms.

Payables Turnover: This ratio shows variability with a notable increase from 10.20 in September 2020 to peaks over 11.00 in some quarters (March 2023, September 2023). Such elevated ratios indicate shorter payables periods, implying a tendency toward faster payments to suppliers or decreased credit terms offered by suppliers. Conversely, a downward trend is observed towards June 2025, where the ratio declines to approximately 6.61, reflecting longer periods of accounts payable, which could be indicative of strategic stretching of payables or negotiating longer credit terms.

Working Capital Turnover: The ratio illustrates significant fluctuations, notably a sharp increase from 1.59 in December 2024 to 3.60 in March 2025, and stabilizes around 3.60 to 3.67 in mid-2025. Earlier periods exhibit lower ratios (approximately 1.19 to 2.94), suggesting periods where the firm’s working capital base was relatively high or less efficiently utilized. The recent upward trend indicates an improvement in generating sales or operational efficiency relative to working capital invested.

Summary: Overall, Viavi Solutions Inc’s activity ratios reflect a dynamic operational environment with periods of efficiency and slowdown. The inventory turnover trend indicates some periods of excess inventories or slowed sales, which improved post-2023. Receivables management improved toward late 2022, but fluctuations suggest variability in collection performance. Payables turnover shows shifts between faster and slower payment cycles, possibly influenced by negotiated credit terms. The working capital turnover demonstrates improvement in asset utilization efficiency in the recent periods, particularly around 2025, which could be indicative of strategic changes or operational improvements.

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Average number of days

The analysis of Viavi Solutions Inc.'s activity ratios—specifically Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Days of Payables—provides insight into the company's operational efficiency and working capital management over the period extending from September 2020 through June 2025.

Days of Inventory on Hand (DOH):
The company's inventory holding period has exhibited a general upward trend over the analyzed period. Starting at 69.14 days in September 2020, DOH increased steadily, reaching a peak of approximately 96.71 days in December 2024 before decreasing slightly to 86.32 days in March 2024, and then fluctuating around the 80-95 days range for subsequent periods. This prolonged inventory holding period suggests that Viavi has been maintaining higher levels of inventory relative to sales, which may reflect strategic inventory buildup, slower inventory turnover, or adjustments in supply chain management. The substantial increase in DOH from early 2021 indicates a possible shift toward longer inventory cycles, potentially impacting liquidity and working capital utilization.

Days of Sales Outstanding (DSO):
The receivables collection period has been volatile but generally increased over the period. Initially, DSO fluctuated between approximately 71.65 days (September 2020) and 83.05 days (March 2021), then showed a decline to 65.56 days in December 2022. However, from March 2023 onward, DSO trended upward sharply, reaching 97.38 days in March 2025. This escalation indicates a trend toward longer collection periods, which could suggest challenges in receivables management, slower customer payments, or changes in credit policies. The significant rise in DSO particularly in the recent periods reflects potential liquidity concerns or shifts in customer payment behaviors, warranting ongoing monitoring.

Days of Payables:
The payables period has demonstrated moderate fluctuations but with an overall increasing trend from 35.80 days in September 2020 to a peak of 55.26 days in March 2025. Notably, the company has extended its payment terms over time, which can be a strategic approach to manage cash flows and working capital. However, an elongation in the days payable outstanding may also impact supplier relationships and creditworthiness if not managed carefully.

Overall Implications:
The combined trends—lengthening inventory days and receivables days, alongside increasing days payable—indicate a shift toward extended operating cycles. This pattern suggests efforts to optimize cash management by delaying outflows and increasing inventory and receivables periods. While such strategies can improve short-term liquidity, they also pose risks related to inventory obsolescence, customer credit risk, and supplier relationships. Continuous monitoring is essential to ensure these activity ratios align with operational objectives and do not adversely affect the company’s financial stability and operational efficiency.

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Long-term

The analysis of Viavi Solutions Inc.'s long-term activity ratios reveals distinct trends over the observed periods. The fixed asset turnover ratio, which measures how efficiently the company utilizes its fixed assets to generate sales, demonstrates a declining pattern from a high of 6.39 on September 30, 2020, to 4.55 by June 30, 2023. This gradual decrease suggests that the company's ability to generate revenue from its fixed assets has diminished over time, potentially indicating either increased investment in fixed assets that have not yet contributed proportionally to sales or a decline in asset utilization efficiency.

Conversely, the total asset turnover ratio, which assesses the overall efficiency of asset utilization to generate sales, has exhibited relatively stable fluctuations within a narrow range. It started at 0.61 on September 30, 2020, and showed slight variations, reaching 0.54 on June 30, 2025. This downward trend, although modest, indicates a marginal decrease in overall asset efficiency. The stability in the ratio's fluctuations suggests that, despite the decline seen in fixed asset efficiency, the company's total asset efficiency has not experienced dramatic shifts.

In summary, the company's fixed asset productivity has consistently declined over the analyzed period, while overall asset utilization has remained relatively steady but with a slight downward drift. These patterns may warrant further investigation into the company's asset management strategies and the nature of its asset base to understand the underlying causes of these efficiency changes.