Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Arista Networks Inc., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 4.36 | 4.39 | 4.29 | 4.34 | 4.99 | |
| Quick ratio | 3.46 | 3.16 | 3.05 | 3.54 | 4.25 | |
| Cash ratio | 3.04 | 2.62 | 2.34 | 3.07 | 3.74 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio shows a slight decline from 4.99 in 2020 to 4.29 in 2022, indicating a gradual decrease in the company's ability to cover short-term liabilities with current assets. However, from 2022 to 2024, the ratio stabilizes around 4.3 to 4.4, suggesting a consistent liquidity position over the recent years.
- Quick Ratio
- The quick ratio demonstrates a more pronounced decline from 4.25 in 2020 to 3.05 in 2022, reflecting a reduction in liquid assets excluding inventories available to meet current liabilities. Although there is a modest recovery to 3.46 by 2024, the overall downward trend indicates a tightening in immediately liquid asset coverage over the period.
- Cash Ratio
- The cash ratio declines from 3.74 in 2020 to a low of 2.34 in 2022, signaling a decrease in the most liquid assets relative to current liabilities. Starting in 2022, there is a noticeable improvement, with the ratio rising to 3.04 by 2024. This recovery suggests enhanced cash or cash-equivalent reserves in recent years, contributing to improved liquidity.
Current Ratio
Arista Networks Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 11,910,815) | 8,390,235) | 5,550,748) | 4,812,676) | 3,836,998) | |
| Current liabilities | 2,732,222) | 1,909,606) | 1,293,531) | 1,109,829) | 768,243) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 4.36 | 4.39 | 4.29 | 4.34 | 4.99 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Apple Inc. | 0.87 | 0.99 | 0.88 | 1.07 | 1.36 | |
| Cisco Systems Inc. | 0.91 | 1.38 | 1.43 | 1.49 | 1.72 | |
| Dell Technologies Inc. | 0.74 | 0.82 | 0.80 | 0.80 | 0.70 | |
| Super Micro Computer Inc. | 3.81 | 2.31 | 1.91 | 1.93 | 2.25 | |
| Current Ratio, Sector | ||||||
| Technology Hardware & Equipment | 0.91 | 1.04 | 0.95 | 1.08 | 1.24 | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.24 | 1.41 | 1.37 | 1.55 | 1.71 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 11,910,815 ÷ 2,732,222 = 4.36
2 Click competitor name to see calculations.
The data provides insights into the liquidity and short-term financial position over five years.
- Current Assets
- There is a clear upward trend in current assets, increasing from approximately 3.84 billion US dollars in 2020 to over 11.91 billion US dollars by the end of 2024. This shows substantial growth and suggests an increasing capacity to cover short-term obligations.
- Current Liabilities
- Current liabilities have also risen over the analyzed period, moving from around 768 million US dollars in 2020 to approximately 2.73 billion US dollars in 2024. Although liabilities have increased, the growth rate appears to be proportionally less steep than that of current assets.
- Current Ratio
- The current ratio demonstrates a high level of liquidity throughout the period, consistently above 4.0, indicating that current assets significantly exceed current liabilities. The ratio decreased slightly from 4.99 in 2020 to a low of 4.29 in 2022, then somewhat stabilized around 4.36 by 2024. This suggests that the company's ability to meet short-term obligations remains strong despite slight fluctuations.
Overall, the financial data reveals robust growth in current assets alongside a rise in short-term liabilities, with the liquidity position remaining solid. The high and relatively stable current ratio indicates effective management of working capital over the observed timeframe.
Quick Ratio
Arista Networks Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 2,762,357) | 1,938,606) | 671,707) | 620,813) | 893,219) | |
| Marketable securities | 5,541,116) | 3,069,362) | 2,352,022) | 2,787,502) | 1,979,649) | |
| Accounts receivable, net | 1,140,478) | 1,024,569) | 923,096) | 516,509) | 389,540) | |
| Total quick assets | 9,443,951) | 6,032,537) | 3,946,825) | 3,924,824) | 3,262,408) | |
| Current liabilities | 2,732,222) | 1,909,606) | 1,293,531) | 1,109,829) | 768,243) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 3.46 | 3.16 | 3.05 | 3.54 | 4.25 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Apple Inc. | 0.75 | 0.84 | 0.71 | 0.91 | 1.22 | |
| Cisco Systems Inc. | 0.69 | 1.13 | 1.16 | 1.32 | 1.58 | |
| Dell Technologies Inc. | 0.44 | 0.52 | 0.49 | 0.59 | 0.51 | |
| Super Micro Computer Inc. | 1.88 | 1.16 | 0.75 | 0.72 | 0.87 | |
| Quick Ratio, Sector | ||||||
| Technology Hardware & Equipment | 0.72 | 0.83 | 0.72 | 0.89 | 1.08 | |
| Quick Ratio, Industry | ||||||
| Information Technology | 0.96 | 1.12 | 1.08 | 1.30 | 1.46 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 9,443,951 ÷ 2,732,222 = 3.46
2 Click competitor name to see calculations.
The financial data indicates a general upward trend in total quick assets over the five-year period. From 2020 to 2024, total quick assets increased significantly from approximately 3.26 billion US dollars to around 9.44 billion US dollars, marking a strong growth trajectory.
Current liabilities have also shown consistent growth throughout the same period. Starting at approximately 768 million US dollars in 2020, these liabilities rose to about 2.73 billion US dollars by 2024. This increase, although substantial, appears to be at a slower rate relative to the growth in quick assets.
Regarding liquidity, the quick ratio shows a declining trend from 4.25 in 2020 to 3.05 in 2022, suggesting a reduction in the company's immediate liquidity relative to its current liabilities during those years. However, from 2022 onwards, the quick ratio exhibits a moderate recovery, increasing to 3.16 in 2023 and further to 3.46 in 2024. This indicates an improvement in the company's ability to meet short-term obligations with its most liquid assets after the initial dip.
- Total Quick Assets
- Strong and consistent growth indicating greater availability of liquid assets over time.
- Current Liabilities
- Increasing steadily but at a pace that is slower relative to the growth in quick assets.
- Quick Ratio
- Initially declining through 2022, followed by a gradual recovery through 2024, reflecting enhanced short-term liquidity management in recent years.
Cash Ratio
Arista Networks Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | 2,762,357) | 1,938,606) | 671,707) | 620,813) | 893,219) | |
| Marketable securities | 5,541,116) | 3,069,362) | 2,352,022) | 2,787,502) | 1,979,649) | |
| Total cash assets | 8,303,473) | 5,007,968) | 3,023,729) | 3,408,315) | 2,872,868) | |
| Current liabilities | 2,732,222) | 1,909,606) | 1,293,531) | 1,109,829) | 768,243) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 3.04 | 2.62 | 2.34 | 3.07 | 3.74 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Apple Inc. | 0.37 | 0.42 | 0.31 | 0.50 | 0.86 | |
| Cisco Systems Inc. | 0.44 | 0.84 | 0.75 | 0.93 | 1.16 | |
| Dell Technologies Inc. | 0.15 | 0.17 | 0.17 | 0.26 | 0.18 | |
| Super Micro Computer Inc. | 0.71 | 0.32 | 0.18 | 0.24 | 0.30 | |
| Cash Ratio, Sector | ||||||
| Technology Hardware & Equipment | 0.37 | 0.44 | 0.34 | 0.50 | 0.72 | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.57 | 0.71 | 0.66 | 0.88 | 1.06 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 8,303,473 ÷ 2,732,222 = 3.04
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets exhibit an overall increasing trend from 2020 to 2024. The cash holdings rose steadily from approximately 2.87 billion in 2020 to 3.41 billion in 2021. Although there was a slight decline to around 3.02 billion in 2022, a significant rebound occurred in the following years, reaching nearly 5.01 billion in 2023 and markedly increasing to 8.30 billion in 2024. This indicates a strong liquidity position bolstered by substantial growth in cash reserves towards the end of the period analyzed.
- Current liabilities
- Current liabilities have consistently increased over the five-year period. Starting at about 768 million in 2020, liabilities climbed each year, nearly doubling to roughly 1.11 billion in 2021, then rising further to 1.29 billion in 2022. The upward trajectory continued more pronouncedly in the subsequent years, reaching close to 1.91 billion in 2023 and expanding further to approximately 2.73 billion in 2024. This steady rise in current liabilities suggests increasing short-term obligations that the company needs to manage efficiently amidst growing cash assets.
- Cash ratio
- The cash ratio shows a decreasing trend initially, dropping from 3.74 in 2020 to 2.34 in 2022, reflecting a diminishing coverage of current liabilities by cash assets. Despite this decline, the ratio improved in 2023 to 2.62 and further increased to 3.04 in 2024. The fluctuations in the cash ratio mirror the changes in both total cash assets and current liabilities. Notably, the ratio remains well above 1 throughout the period, indicating a healthy liquidity buffer and a strong ability to cover short-term liabilities with cash and cash equivalents.