Coherent Inc (COHR)

Short-term

Turnover ratios

The analysis of Coherent Inc.'s activity ratios over the period from September 2020 through June 2025 reveals several noteworthy trends and insights into operational efficiency.

Inventory Turnover:
The inventory turnover ratio has experienced moderate fluctuations, generally indicating stable inventory management. Initially, the ratio hovered around 2.79 in September 2020, declining gradually to a low of approximately 1.83 in September 2022. Since then, the turnover has shown a recovery, reaching approximately 2.78 by June 2023 and trending above 2.5 in subsequent quarters. The lower ratios observed between September 2022 and December 2023 suggest a slowdown in inventory activity, possibly due to increased inventories, slower sales, or supply chain adjustments. Contrastingly, the ratio's subsequent increase indicates some improvement in inventory turnover efficiency.

Receivables Turnover:
Receivables turnover exhibits significant variation over the period. Early in the period, notably in December 2020, it was as low as 5.06, implying longer collection periods. However, there is a marked fluctuation, with some ratios reaching as high as 6.12 in September 2023, indicating faster collection of receivables. Notably, a sharp anomaly occurs with a reported value of 0.01 in September 2024, which appears to be anomalous or a data error, as it implies an unrealistically poor collection efficiency. Excluding that data point, the general trend suggests an improved receivables collection efficiency over time, especially from mid-2022 onward.

Payables Turnover:
The payables turnover ratio has generally trended upward from around 6.97 in September 2020 to a peak of about 8.74 in June 2023, indicating a tendency to pay suppliers more quickly. This could reflect a strategic shift towards faster payments to suppliers or improved liquidity positions. A subsequent decline post-June 2023 suggests a possible extension of payment periods or changes in supply chain conditions, with ratios falling to approximately 3.29 by June 2025.

Working Capital Turnover:
The working capital turnover ratio has shown an upward trajectory, rising from about 2.05 in September 2020 to approximately 2.72 in June 2025. This increase indicates enhanced efficiency in using working capital to generate sales relative to the period analyzed. The trend suggests improved operational leverage, with the company increasingly optimizing its short-term assets and liabilities.

Summary:
Overall, Coherent Inc. demonstrates a pattern of improving operational efficiency over the analyzed period. Inventory turnover indicates relatively stable management with some periods of slowdown followed by recovery. Receivables collection appears to be more aggressive in recent years, with a notable—but likely erroneous—exception in September 2024. Payables management has shifted from slower to faster payments, consistent with good liquidity management. The rising working capital turnover reflects improved asset utilization and operational effectiveness. Nonetheless, anomalous data points, particularly in receivables turnover, warrant cautious interpretation.

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Average number of days

The activity ratios for Coherent Inc., as reflected in the data provided, demonstrate several key trends and insights pertaining to inventory holdings, receivables management, and payment practices over the specified periods.

Days of Inventory on Hand (DOH):
From September 2020 through June 2021, the company maintained relatively stable inventory levels, with DOH fluctuating around approximately 130 to 137 days. Starting from September 2021, a discernible upward trend emerged, with DOH increasing steadily and reaching a peak of approximately 199.56 days in September 2022. This indicates a substantial accumulation of inventory relative to sales, potentially reflecting supply chain delays, reduced inventory turnover, or strategic buildup. After this peak, inventory days decreased somewhat, with fluctuations, notably dropping to 131.12 days in June 2023 before rising again towards late 2024. The recent data from September 2024 onward show stabilized inventory levels around 138 to 149 days, suggesting ongoing adjustments to inventory management strategies.

Days of Sales Outstanding (DSO):
Initially, DSO fluctuated modestly, with figures around 29 to 77 days from September 2020 through June 2022, reflecting a typical collection cycle. Starting from September 2022, DSO experienced a marked increase, reaching an extreme anomaly of approximately 92,089 days in September 2022. Given the improbability of such a figure, this likely stems from data entry errors or reporting anomalies. Aside from this outlier, the data indicates a general trend of increased receivables collection periods in late 2022 and early 2023, with DSO stabilizing between approximately 59 to 75 days subsequently, suggesting a lengthening of the credit collection cycle during this period which may tie into extended payment terms or delayed collections. The recent figures maintain this higher average, with some fluctuation.

Number of Days of Payables:
The company's payment practices show variability over the period. From September 2020 through early 2022, payables duration hovered around 52 to 66 days, indicating a moderate payables period. A notable increase occurred beginning in mid-2022, with payables peaking at around 77.76 days in June 2022. The subsequent months display a declining trend, reaching roughly 41.77 days in June 2023, aligning with more prompt payments. However, from late 2023 onward, payables again extended, reaching over 77 days by March 2025, which suggests a trend toward lengthening payment cycles, possibly as a strategy to optimize cash flow or manage liquidity during periods of operational or strategic shifts.

Summary:
Overall, the data indicates that Coherent Inc. experienced a significant increase in inventory days in 2022, indicative of inventory accumulation potentially due to supply chain constraints or strategic stockpiling. The receivables collection period also lengthened, with some anomalies likely due to data inconsistencies, but a general trend of increased DSO values emerged post-2022, suggesting slower collection efforts or extended credit terms. Conversely, the company's payables duration shows a pattern of shortening in 2023 followed by a renewed elongation in 2024 and 2025, reflecting changes in payment policy or cash management strategies. The combined analysis points toward periods of operational adjustment, liquidity management, and evolving credit and inventory policies affecting Coherent Inc.’s activity ratios over the analyzed timeframe.

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Long-term

The analysis of Coherent Inc.'s long-term activity ratios over the provided periods reveals certain trends and notable shifts.

Starting with the Fixed Asset Turnover ratio, it displays a general declining trend from a high of approximately 11.27 times as of September 30, 2020, to a low of around 2.14 times by September 30, 2022. After this period, the ratio appears to stabilize somewhat, with values fluctuating between approximately 2.36 and 2.90 for the subsequent periods up to June 30, 2024. The sharp decline observed in the ratio during 2022 indicates a significant reduction in the efficiency with which fixed assets generate revenue. This could be attributable to increased capital investment, impairments, or operational changes impacting fixed assets' productivity.

The Total Asset Turnover ratio exhibits a downward trend from about 0.51 in the earliest periods (September 2020 through March 2021), with values hovering around 0.42 to 0.49 in later periods. A notable decrease occurs around September 2022, with ratios falling to approximately 0.28 before gradually rebounding to around 0.39 by June 2025. This indicates a reduction in the efficiency of assets in generating sales revenue over time, particularly in the period around 2022, followed by a modest recovery and stabilization.

Overall, these long-term activity ratios suggest that Coherent Inc. experienced a marked decline in asset efficiency between 2020 and 2022. The stabilizing and slight improving trends seen in the latter periods may reflect adjustments in operations, asset base, or strategic realignments aimed at improving utilization. However, the ratios’ lower levels compared to earlier periods imply ongoing challenges in asset utilization efficiency.