Coherent Inc (COHR)

The current ratio measures a company's ability to cover its short-term liabilities with its short-term assets. Coherent Inc's current ratio has shown a decreasing trend over the past five years, from 2.66 in 2020 to 2.72 in 2024. Although the current ratio is above 1, indicating that the company can meet its short-term obligations, the decreasing trend suggests a potential weakening in liquidity over time.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Coherent Inc's quick ratio has also trended downwards over the past five years, from 1.62 in 2020 to 1.32 in 2024. This indicates that the company's ability to meet short-term obligations without relying on inventory has been declining.

The cash ratio is the most conservative liquidity ratio, measuring a company's ability to cover its current liabilities with its cash and cash equivalents alone. Coherent Inc's cash ratio has fluctuated over the years, from 0.73 in 2020 to 0.69 in 2024. The lower cash ratio in 2024 suggests a potential decrease in the company's ability to cover its short-term obligations solely with cash and cash equivalents.

Overall, the liquidity ratios indicate that while Coherent Inc has generally maintained a strong ability to meet its short-term obligations, there has been a declining trend in liquidity over the past five years. It is important for the company to closely monitor its liquidity position and take appropriate measures to ensure it can meet its short-term financial needs effectively.

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Additional liquidity measure

The cash conversion cycle for Coherent Inc has shown a decreasing trend over the last five years, indicating improvements in the company's efficiency in managing its working capital.

In the most recent fiscal year, as of June 30, 2024, the cash conversion cycle stood at 121.25 days, down from 126.01 days in the previous year. This reduction suggests that Coherent Inc has been able to convert its investments in inventory and receivables into cash more quickly.

Comparing the current cycle to five years ago, there has been a significant improvement from 153.53 days in June 2020 to 121.25 days in June 2024. This indicates that the company has become more effective in managing its operating cycle, which includes the time taken to sell inventory, collect receivables, and settle payables.

Overall, the declining trend in the cash conversion cycle reflects Coherent Inc's efforts to streamline its operations and optimize its working capital management, potentially leading to improved liquidity and financial performance.