The review of Net Profit Margin witnessed a mixed trend. The Net Profit Margin increased from 0.99% in 2019 to 2.9% in 2023.
The average EBIT Margin for the period under analysis was 2.6%, with 2020 and 2023 performing the worst and best, respectively.
In the current year, Avnet covered its interest liabilities 4.92 times, compared to 2019 when it was 2.75 times.
The Asset turnover stood at 2.32 times in 2023 from 2.15 times in 2019, implying a high performance on Assets of the business in relation to revenue.
Profitability
The revenue of Avnet has increased and decreased over the years. The revenue decreased by 10% between 2019 and 2020 and an increase of 11% was recorded between 2020 and 2021. There also occurred an increase of 9% between 2022 and 2023 (the current period).
Avnet’s performance in profitability looks good as the return on capital employed also recorded mixed performance during the period of analysis.
Liquidity
The company’s result in liquidity looks poor, as current ratio/acid test decreased from 2.67:1/1.50:1 to 2.53:1/1.24:1 on the last year. Which implies that the company does not have enough assets to settle its current liabilities.
Cash conversion cycle declined over the 5-year period as it took an average of 82 days to convert inventories to cash.
Capital Structure
Avnet is both equity and debt financed.
The debt-to-equity (D/E) ratio has been mixed year on year. The gearing position of the company appears to be high as it stood at 163% in the current year.