Applied Industrial Technologies (AIT)

Liquidity ratios

Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020
Current ratio 3.32 3.57 3.76 3.78 3.53 3.77 3.75 3.52 3.05 3.14 3.18 3.08 2.72 2.79 2.86 2.59 2.80 2.63 2.70 2.74
Quick ratio 2.20 2.34 2.33 2.57 2.39 2.52 2.39 2.26 1.95 1.85 1.83 1.82 1.68 1.74 1.69 1.67 1.81 1.75 1.72 1.73
Cash ratio 0.74 0.74 0.71 1.13 0.92 0.97 0.92 0.77 0.64 0.38 0.37 0.33 0.37 0.41 0.39 0.53 0.60 0.65 0.68 0.65

The analysis of Applied Industrial Technologies' liquidity ratios over the specified period reveals a consistent pattern of strong liquidity positions, with some notable trends evident across the three key ratios: current ratio, quick ratio, and cash ratio.

Current Ratio:
The current ratio demonstrates a generally stable and upward trending liquidity profile. Starting at 2.74 as of September 30, 2020, the ratio experienced minor fluctuations but maintained a level well above 2.0, indicating that current assets consistently substantially cover current liabilities. The ratio declined slightly around mid-2021, with a low of 2.59 at September 2021, but then recovered robustly, reaching a peak of 3.78 by September 2024. This upward movement signifies an increasing buffer of current assets relative to current liabilities, suggesting improving short-term liquidity and operational flexibility.

Quick Ratio:
The quick ratio, excluding inventory, follows a similar trend of stability and gradual increase. Beginning at 1.73 in September 2020, it remained relatively stable through 2021, fluctuating mildly but maintaining above 1.67. Post-2022, the quick ratio exhibits a clear upward trajectory, peaking at 2.57 in September 2024. The continuous improvement in this ratio signals enhanced liquidity when excluding inventory, emphasizing the company's ability to meet short-term obligations with its most liquid assets.

Cash Ratio:
The cash ratio, which reflects immediate liquidity, shows a more volatile yet discernible upward trend over the period. Initially at 0.65 in September 2020, it experienced fluctuations but generally increased over time. Notably, from around 0.37 in June 2022, it rose significantly, reaching a high of 1.13 in September 2024. This indicates a substantial increase in cash holdings relative to current liabilities, enhancing the company's capacity to settle short-term obligations instantaneously. The rise in cash ratio underscores improved cash management and liquidity positioning.

Overall Summary:
Across all three ratios, Applied Industrial Technologies exhibits a pattern of strengthening liquidity over the analyzed period. The current and quick ratios, both above 2.0 in recent periods, highlight substantial short-term financial health and a comfortable margin to cover liabilities. The incremental rise in the cash ratio further emphasizes the company’s increasing liquidity cushion, reflecting effective cash management and liquidity provisioning. This trend collectively suggests a robust liquidity profile, with the company maintaining ample liquid assets and current resources to meet its short-term obligations comfortably throughout the period under review.


Additional liquidity measure

Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020
Cash conversion cycle days 87.41 86.54 88.78 83.04 85.59 85.93 84.80 85.86 81.89 89.60 91.03 89.33 88.57 87.02 83.01 82.67 82.74 84.30 81.02 82.02

The Cash Conversion Cycle (CCC) of Applied Industrial Technologies exhibits fluctuations over the analyzed period, reflecting variations in the company's efficiency in managing working capital components. Beginning with a value of approximately 82.02 days on September 30, 2020, the CCC remained relatively stable through 2020 and into early 2021, oscillating narrowly around 81 to 84 days, indicating a steady period of operational efficiency.

In 2021, the cycle experienced a gradual upward trend, reaching approximately 87.02 days by March 31, 2022. This increase suggests a lengthening of the time required to convert investments in inventory and receivables into cash, potentially due to extended inventory holding periods or slower collection processes.

The cycle continued to expand through the first half of 2022, attaining a peak of approximately 91.03 days as of December 31, 2022. This elongation could imply challenges in receivables collection, inventory turnover, or both, leading to increased working capital requirements. During 2023, there was a notable reduction to around 81.89 days as of June 30, indicating improvement in cash conversion efficiency, but this was followed by fluctuations in subsequent quarters, with the CCC generally trending upward again.

By September 30, 2023, the CCC stood at 85.86 days, slightly higher than earlier periods but within a comparable range, and then exhibited a modest decrease to 84.80 days by the end of 2023. In the first half of 2024, the cycle remained relatively stable around the mid-80 days, with a slight uptick approaching 85.93 days in March 2024, and a minor decrease to 85.59 days in June 2024.

The second half of 2024 shows a rise to approximately 88.78 days in December, with subsequent quarters maintaining similar levels around 86 and 87 days through mid-2025. This indicates a slight lengthening in the cash conversion cycle, which may reflect cyclical working capital management or operational factors impacting inventory turnover and receivables collection.

Overall, the application of these fluctuations reveals periods of improved efficiency interspersed with phases of longer cash conversion cycles. The long-term trend suggests a persistence of cycles ranging approximately from 81 to 91 days, underlining the importance of ongoing working capital management to optimize operational liquidity and cash flow generation.