Broadridge Financial Solutions Inc (BR)

The liquidity ratios of Broadridge Financial Solutions Inc. over the specified period exhibit varied trends and levels of liquidity. The current ratio, which measures the company's ability to meet its short-term obligations with its total current assets, fluctuated around near breakeven levels, reaching a high of 1.08 on June 30, 2024, after declining to 0.58 on June 30, 2023. This indicates periods of adequate liquidity generally maintained above 1, but notably dipped below 1 in 2023, suggesting potential liquidity constraints during that period.

The quick ratio, which sharpens the focus to exclude inventories and other less liquid assets, follows a similar pattern. It remained below 1 across all dates, with the lowest point at 0.51 on June 30, 2023, again indicating a weaker liquidity position during that year. The quick ratio improved significantly in 2024 to nearly 1.00, aligning with the peak in the current ratio, demonstrating enhanced liquidity and greater capacity to cover short-term liabilities with the most liquid assets.

The cash ratio, representing the most conservative measure of liquidity by comparing cash and cash equivalents to current liabilities, shows a more volatile but generally low level throughout the period. It was at 0.21 in 2021, decreased slightly in 2022 to 0.17, then further to 0.11 in 2023, indicating limited immediate cash resources relative to current liabilities. There was a notable increase to 0.21 in 2024 and an improvement to 0.30 by 2025, suggesting a positive development in cash reserves that enhances the company's ability to meet short-term obligations solely through cash holdings.

Overall, the liquidity profile of Broadridge Financial Solutions Inc. demonstrates periods of resilience interspersed with challenges, particularly evident in 2023 when ratios pointed to liquidity constraints. The recovery in cash and current liabilities coverage ratios in 2024 and 2025 indicates an improving liquidity position, though levels remain modest relative to the ideal benchmark of around 1 or higher across these ratios.

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Additional liquidity measure

The analysis of Broadridge Financial Solutions Inc.'s cash conversion cycle (CCC) over the specified period reveals notable fluctuations indicative of changing operational efficiencies and working capital management.

As of June 30, 2021, the CCC stood at approximately 36.89 days, reflecting the company's initial capacity to convert its investments in inventory and accounts receivable into cash within a relatively moderate timeframe. However, this cycle extended significantly by June 30, 2022, reaching approximately 41.42 days, suggesting a deterioration in either receivables collection, inventory turnover, or an increase in accounts payable deferral that extended the overall cycle duration.

The upward trend persisted into June 30, 2023, with the CCC increasing further to approximately 48.14 days. This continued elongation could be indicative of more pronounced inefficiencies in receivables management or inventory management, or possibly changes in credit terms offered to customers. An extended CCC typically implies a longer period of capital tied up in operations, which may impact cash flow liquidity.

Subsequently, a notable improvement occurred; by June 30, 2024, the CCC contracted back to approximately 37.15 days. This reduction suggests that operational adjustments or strategic initiatives may have been implemented, leading to more efficient receivables collection or inventory turnover, or a renegotiation of payable terms to optimize working capital.

By June 30, 2025, the CCC slightly increased again to approximately 40.15 days, marking a modest elongation relative to the 2024 figure but still maintaining a shorter cycle compared to the peak in 2023. This pattern indicates a degree of cyclical or operational variability that the company appears to be managing within a range.

Overall, the trajectory of Broadridge's CCC over this period illustrates periods of operational stress followed by strategic improvements. While the cycle experienced expansion through 2022 and 2023, efforts seem to have been made to restore more efficient working capital management by 2024. Continued monitoring of these trends will be essential for assessing the company's effectiveness in managing its cash flow cycle amid evolving market or operational conditions.