Applied Industrial Technologies (AIT)

The liquidity ratios of Applied Industrial Technologies have shown a consistent improvement over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been steadily increasing from 2.72 in 2020 to 3.53 in 2024. This indicates that the company has a strong liquidity position and is able to easily meet its short-term obligations.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown a positive trend. The quick ratio has increased from 1.69 in 2020 to 2.37 in 2024, demonstrating the company's ability to meet its immediate financial obligations without relying on inventory liquidation.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has also shown marked improvement. The cash ratio has increased from 0.37 in 2022 to 0.92 in 2024, indicating that Applied Industrial Technologies has a higher proportion of cash on hand relative to its current liabilities.

Overall, the increasing trends in all three liquidity ratios suggest that Applied Industrial Technologies has been effectively managing its liquidity position and has a strong ability to meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Applied Industrial Technologies has fluctuated over the past five years. In the most recent fiscal year as of June 30, 2024, the cash conversion cycle was 79.22 days, showing a slight increase compared to the previous year. This indicates that, on average, it takes the company approximately 79.22 days to convert its investments in inventory and other resources into cash from sales.

Comparing this to the trend over the previous four years, we observe that the cash conversion cycle has remained relatively stable, with fluctuations in the range of 3-6 days. This suggests that Applied Industrial Technologies has been consistent in managing its working capital efficiency.

Although the cash conversion cycle is just one metric and should be analyzed in conjunction with other financial ratios for a comprehensive assessment of the company's operational efficiency and liquidity management, the trends observed provide valuable insights into the company's ability to effectively manage its cash flow and working capital over the years.