Carpenter Technology Corporation (CRS)

The liquidity ratios of Carpenter Technology Corporation over the observed period demonstrate varying trends that reflect the company's changing ability to meet its short-term obligations.

The current ratio, which measures the company's capacity to cover current liabilities with total current assets, initially decreased from 3.65 on June 30, 2021, to 2.98 on June 30, 2022, and further declined to 2.79 on June 30, 2023. Despite this downward trend, the current ratio increased again to 3.41 in June 2024 and reached 3.65 in June 2025, returning to the levels observed in 2021. This pattern suggests an initial tightening of liquidity position, followed by a recovery and improvement in the company's ability to meet short-term liabilities with current assets.

The quick ratio, which refines the liquidity assessment by excluding inventory from current assets, exhibited a sharper decline from 1.95 in 2021 to 1.43 in 2022 and further down to 1.25 in 2023. This indicates a reduced capacity to settle short-term liabilities promptly without relying on inventory. From 2023 onward, the quick ratio experienced an upward trend, reaching 1.67 in 2024 and 1.84 in 2025, highlighting an enhanced liquidity profile and an improved ability to cover immediate obligations with liquid assets.

The cash ratio, a more conservative indicator of liquidity focusing solely on the most liquid assets, showed a significant decline from 0.94 in 2021 to 0.41 in 2022, then plummeted to 0.10 in 2023. This suggests a substantial reduction in the company's cash holdings relative to current liabilities. However, the cash ratio improved again in the subsequent periods, rising to 0.46 in 2024 and 0.65 in 2025, signifying a gradual replenishment of cash reserves and a better position to satisfy current liabilities solely through cash assets.

Overall, the liquidity position of Carpenter Technology Corporation experienced a decline during 2022 and 2023, primarily reflected in the decreasing current, quick, and cash ratios. Nevertheless, the subsequent recovery in 2024 and 2025 indicates an improvement in liquidity, with ratios returning to or exceeding earlier levels, which enhances the company's short-term financial stability and ability to meet immediate obligations.

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Additional liquidity measure

The analysis of Carpenter Technology Corporation's cash conversion cycle (CCC) over the specified period reveals noticeable fluctuations and a general trend in the company's working capital management efficiency over the four fiscal years ending June 30 of 2021 through 2025.

As of June 30, 2021, the CCC stood at approximately 146.48 days. This figure indicates that, on average, it took the company around 146.5 days to convert its investments in inventory and other resources into cash flows from sales, signifying a relatively extended cycle of working capital turnover at that time.

By June 30, 2022, the CCC decreased to approximately 130.96 days, representing a notable improvement and a reduction of roughly 15.5 days from the previous fiscal year. This reduction suggests an enhancement in operational efficiency, potentially through shorter inventory holding periods, faster receivables collection, or extended payables, which collectively shortened the time between cash outlays and cash inflows.

However, in the subsequent year ending June 30, 2023, the CCC increased somewhat to approximately 135.68 days. This slight uptick indicates a modest slowdown in cash conversion efficiency, potentially due to an elongation of either the inventory days or receivables days, or a change in payables strategy.

Moving into the fiscal year ending June 30, 2024, the CCC rose further to around 153.52 days. This increase points to a lengthening of the cash conversion cycle, implying that the company experienced either longer inventory periods, slower collection of receivables, or a shift toward longer supplier payment terms, which collectively extended the duration needed to convert investments into cash inflows.

Finally, by June 30, 2025, the CCC expanded again to approximately 164.13 days. This trend indicates a continued elongation of the company's cash conversion cycle, reaching its highest point within the analyzed period. The extended cycle could reflect strategic or operational changes such as increased inventory levels, slower receivables collection, or deliberate extended payables to improve cash flow, albeit at the expense of more extended working capital periods.

Overall, the data signifies that Carpenter Technology Corporation experienced a peak in its cash conversion cycle in 2025, after an initial improvement from 2021 to 2022. The fluctuations highlight the dynamic nature of the company's working capital management strategies and operational efficiency. The trend towards lengthening cycles in recent years suggests a shift toward extended periods for converting investments into cash, which may impact the company's liquidity and operational flexibility depending on broader market and industry conditions.