Extreme Networks Inc (EXTR)

The liquidity ratios of Extreme Networks Inc over the period from June 30, 2021, to June 30, 2025, demonstrate a generally declining trend, with some fluctuations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, was 1.07 in 2021. It declined slightly to 0.98 in 2022, and stabilized at 1.00 in 2023. However, in 2024, the current ratio further decreased to 0.90 and remained relatively steady at 0.91 in 2025. This pattern indicates a gradual weakening in the company's capacity to meet short-term obligations solely through current assets.

The quick ratio, providing a more stringent test by excluding inventories from current assets, showed a decline from 0.89 in 2021 to 0.76 in 2022, and further to 0.72 in 2023. The ratio sharply fell to 0.48 in 2024 before improving slightly to 0.61 in 2025. The dip below 1.0 in most years suggests that the company consistently had insufficient liquid assets (excluding inventories) to cover current liabilities, especially noticeable in 2024.

The cash ratio, which considers only cash and cash equivalents against current liabilities, decreased from 0.54 in 2021 to 0.39 in 2022. It experienced a marginal increase to 0.41 in 2023, followed by a decline to 0.30 in 2024 and a subsequent rise to 0.39 in 2025. Despite fluctuations, the cash ratio remained below 0.5 in most years, indicating that cash holdings alone were generally insufficient to fully cover short-term liabilities.

Overall, the analysis indicates that Extreme Networks’ liquidity position has been weakening over the analyzed period. The ratios reveal a trend toward less liquidity, with current, quick, and cash ratios all showing declines and durations where liquidity metrics fell below the generally accepted benchmark of 1.0. This trend may reflect increasingly tight liquidity management or changes in the company's working capital structure, which could warrant further examination of its short-term financial health and operational efficiency.

---

Additional liquidity measure

The cash conversion cycle (CCC) of Extreme Networks Inc. demonstrated notable fluctuations over the period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the company's CCC stood at approximately 33.13 days. This modest cycle incrementally increased to 33.85 days by June 30, 2022, indicating a relatively stable operating cycle with minimal variation in working capital management.

However, a more pronounced change occurred by June 30, 2023, when the CCC lengthened to approximately 43.63 days. This increase suggests a gradual slowdown in the company's ability to convert investments into cash, potentially reflecting longer inventory holding periods, extended receivables, or delays in accounts payable.

The most significant shift was observed between June 30, 2023, and June 30, 2024, as the CCC sharply surged to approximately 96.49 days. This dramatic elongation indicates a substantial deterioration in working capital efficiency, potentially driven by extended days inventory outstanding, increased receivables, or delayed payables, which together extended the cash conversion timeline considerably.

By June 30, 2025, the CCC showed some improvement, decreasing to approximately 73.29 days. Despite this reduction, the cycle remained considerably longer than the 2021–2023 levels, reflecting ongoing challenges in managing liquidity and operational efficiency.

In summary, the trend of the cash conversion cycle over this period reflects a significant deterioration in Extreme Networks Inc.'s ability to efficiently convert its investments into cash, particularly during the period leading up to 2024. While there was some partial recovery in 2025, the overall cycle remains elevated relative to the initial years, indicating ongoing pressures on working capital management and operational efficiency.