Avnet Inc (AVT)

The liquidity ratios of Avnet Inc. over the period from June 30, 2021, to June 30, 2025, reveal the company's ability to meet its short-term obligations with its available assets. The current ratio has fluctuated within a relatively narrow range, declining from 2.34 in 2021 to a low of 2.09 in 2022, before recovering to 2.53 in 2023. Subsequently, it experienced a slight decrease to 2.32 in 2024, followed by an increase to 2.43 in 2025. These movements indicate a generally stable short-term liquidity position, with the company maintaining more than twice its current liabilities in current assets across the period.

The quick ratio shows a similar pattern of fluctuation with a general declining trend from 1.24 in 2021 to a nadir of 1.05 in 2022, then a modest increase to 1.19 in 2023. This ratio remained relatively stable at 1.05 in 2024 and increased slightly to 1.09 in 2025. These figures suggest that Avnet maintains a solid level of liquid assets that can be quickly converted to cash to cover immediate liabilities, although the ratio reflects some sensitivity to changes in current inventory or receivables.

The cash ratio, which measures the proportion of current liabilities covered by cash and cash equivalents, remained very low throughout the period. It was 0.07 in 2021, decreased to 0.04 in 2022, and returned to 0.07 in 2023 before holding steady at 0.07 in 2024 and declining slightly to 0.05 in 2025. These low values indicate that cash and cash equivalents constitute a small fraction of the company's total current liabilities, implying that Avnet relies more heavily on other liquid assets rather than cash to support its short-term liquidity needs.

Overall, the data demonstrates that Avnet maintains stable and adequate liquidity levels, with current and quick ratios consistently above 1, signaling a comfortable buffer to meet short-term liabilities. However, the persistently low cash ratio indicates limited cash holdings relative to current liabilities, relying instead on receivables, inventories, or other liquid assets. The observed fluctuations reflect the company's operational and financial strategy in managing its liquidity position over the analyzed period.

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Additional liquidity measure

The cash conversion cycle (CCC) of Avnet Inc has exhibited variability over the specified period. As of June 30, 2021, the CCC was 84.45 days, indicating the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. This metric decreased to 78.47 days by June 30, 2022, suggesting an improvement in cash flow efficiency during that year.

However, from June 30, 2022, to June 30, 2023, the CCC increased significantly to 98.21 days, reflecting a deterioration in the company's ability to convert its resources into cash in a timely manner. This upward trend continued into the subsequent year, with the cycle reaching 104.39 days as of June 30, 2024, and maintaining a similar level at 103.35 days by June 30, 2025.

Overall, the data indicates that while Avnet Inc temporarily improved its cash conversion cycle in 2022, subsequent years have seen a lengthening of the cycle. This suggests increased working capital tied up in inventory and receivables, or delays in collection and inventory turnover, which could impact the company's liquidity and operational efficiency. The trend warrants further analysis to identify underlying causes and strategic implications.