Avnet Inc (AVT)

The analysis of Avnet Inc.’s liquidity ratios over the period from September 2020 to June 2025 reveals a generally stable liquidity position with some fluctuations.

Current Ratio:
The current ratio has maintained an above-2 level throughout the analyzed period, indicating a consistent capacity to cover short-term liabilities with current assets. Starting at 2.39 in September 2020, it experienced a slight decline to a low of 2.02 in March 2022, but thereafter exhibited a gradual increasing trend, reaching approximately 2.54 in September 2023. This suggests a stable liquidity buffer, with the ratios remaining well above the commonly accepted benchmark of 1.5, indicating sound short-term liquidity management.

Quick Ratio:
The quick ratio, which excludes inventory from current assets, also remained relatively stable but exhibited more variability than the current ratio. Beginning at 1.25 in September 2020, it experienced a decline, reaching a low of approximately 1.00 by September 2022, implying increased reliance on inventory or other less liquid current assets during that period. Subsequently, the ratio recovered somewhat, reaching around 1.22-1.26 in early 2023 and maintaining levels close to 1.05-1.09 through mid-2025. The quick ratio consistently remains above 1.0, indicating that Avnet generally has sufficient liquid assets to meet immediate liabilities without needing to liquidate inventory.

Cash Ratio:
The cash ratio, a more stringent measure of liquidity, remained relatively low throughout the period, fluctuating between 0.02 and 0.17. It was highest at 0.17 in September 2020 and repeatedly remained well below 0.1 in subsequent periods, reflecting a limited proportion of cash and cash equivalents relative to current liabilities. The most recent figures from June and September 2025 indicate ratios of approximately 0.05 to 0.06, consistent with a conservative cash position.

Summary:
Overall, Avnet Inc. demonstrated stable current and quick ratios, indicating a reliable short-term liquidity position with sufficient current assets to cover liabilities. The current ratio consistently exceeded 2, reflecting an ample buffer, while the quick ratio hovered around 1.0–1.3, suggesting adequate liquidity without over-reliance on inventory. The cash ratio remained low throughout, emphasizing a minimal cash holdings strategy or efficient cash management, with liquidity comfortably maintained primarily through other short-term current assets. This stability underpins the company’s capacity to meet its short-term obligations reliably across the analyzed period.

---

Additional liquidity measure

The cash conversion cycle (CCC) of Avnet Inc. has exhibited notable fluctuations over the analyzed period from September 2020 through June 2025. Starting at approximately 82.89 days in September 2020, the CCC remained relatively stable around the low 80s through September 2021, with minor variations. During this period, the cycle fluctuated slightly, ranging from a low of 78.40 days in March 2022 to a high of 85.23 days in December 2021, indicating a relatively consistent and moderate level of working capital efficiency.

From late 2021 onward, a discernible upward trend in the CCC is observable. The figure increased consistently, reaching a peak of approximately 109.76 days in December 2023. This signifies a lengthening of the overall cycle, primarily due to extended periods in inventory holding and receivables collection, or potentially delayed payables, thereby reducing liquidity turnover efficiency.

Throughout 2024 and into mid-2025, the CCC appears to stabilize somewhat, fluctuating in the vicinity of 101.50 days to 104.39 days. Despite some minor short-term variances, the overall trend indicates an extended working capital cycle relative to the initial period, suggesting the company is taking longer to convert its investments in inventory and receivables into cash.

This elongation of the cash conversion cycle could imply several operational implications. It may point towards increased inventory levels, slower collection of receivables, or extended payables, reflecting adjustments in working capital management strategies or shifts in the supply chain and customer payment behaviors. The significant increase around late 2022 and 2023 warrants further analysis into underlying factors such as changes in sales volume, credit policies, supply chain disruptions, or industry-specific dynamics impacting Avnet’s operational cash flow management.

In summary, Avnet Inc.’s cash conversion cycle has experienced a general upward trend over the analyzed period, moving from a stable, moderate cycle of approximately 83 days to a considerably longer cycle averaging around 103 days, indicating a relative decline in working capital efficiency over time.