Coherent Inc (COHR)

The liquidity ratios of Coherent Inc. demonstrate a pattern of gradual decline over the analyzed period, indicating a weakening of the company's short-term liquidity position.

The current ratio, which measures the company's ability to meet its short-term obligations with its total current assets, was 3.40 as of September 30, 2022. This ratio declined steadily to 3.01 as of June 30, 2023, remaining stable through September 30, 2023. A further reduction was observed by June 30, 2024, decreasing to 2.72. This indicates that while the company still maintains a healthy buffer of current assets over current liabilities, the margin for safety has narrowed over time. However, an aberration occurs by June 30, 2025, where the current ratio dramatically spikes to 85.07. This anomalous increase could suggest a significant change in the composition of current assets or liabilities, such as an extraordinary increase in current assets, a substantial reduction in current liabilities, or potential accounting adjustments.

The quick ratio, which excludes inventory from current assets to assess immediate liquidity, also reflects a declining trend. It stood at 2.59 on September 30, 2022, decreased to 1.59 by June 30, 2023, and experienced a slight increase to 1.63 on September 30, 2023. The ratio continued to decline to 1.32 by June 30, 2024, and further to 1.04 by June 30, 2025. Despite these decreases, the quick ratio remains above 1, indicating that the company can generally cover its current liabilities with its most liquid assets, though the narrowing margin suggests potential tightening of liquidity.

The cash ratio, which provides a conservative measure of liquidity by focusing solely on cash and cash equivalents, also shows a downward trend. It was at 2.04 as of September 30, 2022, declined sharply to 0.75 by June 30, 2023, and held steady at 0.77 on September 30, 2023. The ratio decreased further to 0.69 on June 30, 2024, and to 0.51 by June 30, 2025. While the cash ratio remains positive, the consistent decline underscores a decreasing availability of cash and cash equivalents to immediately settle current liabilities.

Overall, these ratios collectively illustrate a pattern of diminishing short-term liquidity over the analyzed period, with the exception of an anomalous spike in the current ratio in mid-2025. This trend warrants ongoing monitoring, as sustained declines could impact the company's ability to meet its short-term obligations without reliance on external financing or asset liquidation.

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Additional liquidity measure

The provided data reflects the trajectory of Coherent Inc's cash conversion cycle (CCC) over multiple reporting periods, indicating significant fluctuations in the company's operational cash flow efficiency. As of September 30, 2022, the CCC stood at approximately 160.29 days, which steadily decreased to around 153.12 days by June 30, 2023, and further to 155.12 days by September 30, 2023. This trend suggests a period of operational improvement, with the company increasingly optimizing cash flows related to inventory management, accounts receivable, and accounts payable.

However, a notable deviation occurs by June 30, 2024, where the CCC diminishes substantially to about 139.30 days, signifying an enhancement in the company's efficiency in converting investments in inventory and receivables into cash. This indicates successful efforts in streamlining operations and shortening the cycle duration, thereby improving liquidity and working capital management.

The most pronounced anomaly is observed in the data point for June 30, 2025, where the CCC dramatically escalates to approximately 9,400.09 days. This extraordinary figure likely represents an anomalous data entry, misreporting, or a data integrity issue, as such an extended cycle falls well outside typical industry parameters and plausible operational timelines. The disparity suggests that this figure should be interpreted with caution, and further verification is necessary to understand underlying factors if accurate.

In summary, the company's cash conversion cycle has demonstrated periods of improvement until mid-2024. The sudden spike in 2025 appears to be an aberration, which warrants skepticism and potential data correction before any meaningful analysis or strategic decisions can be derived from this figure. Overall, the trend indicates ongoing efforts to optimize cash flow management, but the questionable data point underscores the importance of corroborating the accuracy of these figures.