Lumentum Holdings Inc (LITE)
Liquidity ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 5.90 | 4.38 | 4.38 | 3.67 | 7.24 |
| Quick ratio | 3.32 | 3.19 | 3.56 | 2.93 | 5.51 |
| Cash ratio | 3.29 | 3.18 | 3.56 | 2.93 | 5.49 |
Lumentum Holdings Inc's liquidity ratios indicate the company's ability to meet short-term obligations.
The current ratio has shown an increasing trend over the years, starting at 7.24 in 2020, then decreasing in 2021 and remaining fairly consistent at around 4.38 in 2022 and 2023, before significantly increasing to 5.90 in 2024. This suggests that the company has a comfortable level of current assets to cover its current liabilities, with a stronger liquidity position in 2024 compared to the previous years.
The quick ratio has also exhibited a relatively stable trend, with slight fluctuations over the years. It was highest in 2022 at 3.56 and lowest in 2021 at 2.93. The ratio improved slightly to 3.19 in 2023 and further to 3.32 in 2024. This indicates that the company has a strong ability to meet its short-term obligations without relying on inventory.
The cash ratio, similar to the quick ratio, has shown consistency over the years with minor changes. It was highest in 2022 at 3.56 and lowest in 2021 at 2.93. The ratio improved to 3.18 in 2023 and further to 3.29 in 2024. The company has maintained a healthy level of cash to cover its current liabilities.
Overall, Lumentum Holdings Inc's liquidity ratios demonstrate a solid liquidity position, with a notable improvement in the current ratio in 2024. This indicates that the company is well-positioned to meet its short-term financial obligations and has a sufficient level of liquid assets to support its operations.
Additional liquidity measure
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 61.28 | 52.23 | 27.56 | 23.30 | 36.08 |
The cash conversion cycle of Lumentum Holdings Inc has fluctuated over the past five years. It increased from 36.08 days in 2020 to 61.28 days in 2024, indicating a longer time taken to convert its investments in raw materials and production back into cash. The cycle peaked in 2024, suggesting potential inefficiencies in managing its cash flow and working capital. In contrast, the company experienced a significant improvement in 2022 with a cycle of 27.56 days, showing better management of inventory, accounts payable, and accounts receivable. This improvement could imply more effective utilization of resources and enhanced operational efficiency. Overall, fluctuations in the cash conversion cycle highlight the importance of closely monitoring working capital management to optimize cash flow and operational performance.