Lumentum Holdings Inc (LITE)

The liquidity ratios of Lumentum Holdings Inc. exhibit a generally stable and strong liquidity position over the analyzed periods, with fluctuations reflective of operational and financial activities.

### Current Ratio
The current ratio, which measures the company's capacity to cover its short-term liabilities with current assets, has demonstrated significant variability from September 2020 through June 2025. Initially, there was a high level of liquidity, with a ratio of 7.38 in September 2020, indicating ample current assets relative to current liabilities. Subsequently, the ratio declined sharply to 3.50 by December 2020, but generally remained within a range of approximately 3.04 to 4.69 through the subsequent periods, suggesting consistent short-term financial stability. The highest current ratio observed is 5.90 in June 2024, while the lowest within this window is 3.04 in September 2022. Recent data indicates a return to elevated levels, with ratios around 4.37 to 5.36, implying a solid liquidity buffer. Overall, the trend shows resilience, with the ratios comfortably above 1, denoting sufficient liquidity to meet short-term obligations.

### Quick Ratio
The quick ratio, which excludes inventory to measure more liquid assets, follows a similar trend. It peaked at 6.39 in September 2020, indicating very high liquidity, and generally ranged from approximately 2.24 to 4.25 over the periods. The decline in the quick ratio from the initial high suggests a relative reduction in highly liquid assets, yet it remains comfortably above 2 during most periods, denoting good liquidity. The most recent figures around 3.18 to 3.65 reflect a stable quick ratio, signaling a consistent ability to cover immediate liabilities with liquid assets and receivables, excluding inventory.

### Cash Ratio
The cash ratio, representing the company's immediate liquidity position based solely on cash and cash equivalents, was highest at 5.49 in September 2020. Thereafter, it decreased to a low of 1.86 in December 2023 but has shown a recovery trend in recent periods, reaching 3.29 in June 2024 and maintaining levels above 2.0 up to June 2025. The cash ratio’s fluctuations indicate variations in cash holdings relative to short-term liabilities but overall suggest that the company maintains sufficient cash reserves to meet immediate obligations.

### Summary
Across all liquidity measures, Lumentum Holdings Inc. exhibits a strong liquidity position throughout the analyzed periods. The ratios consistently remain well above 1, indicating ample capacity to meet short-term liabilities. The initial high ratios in 2020 tapering to more moderate levels suggest adjustments in asset composition while maintaining robust liquidity. Recent data demonstrates a healthy and stable liquidity profile, with ratios indicating operational flexibility and prudent management of current assets and cash reserves.

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Additional liquidity measure

The cash conversion cycle (CCC) for Lumentum Holdings Inc. has exhibited notable fluctuations from September 2020 through June 2025. Starting at approximately 81.72 days in September 2020, the cycle experienced a general upward trend over the subsequent years, with intermittent periods of slight decline.

By December 2020, the CCC increased to approximately 95.26 days, indicating a lengthening in the time taken to convert investments in inventory and receivables into cash. This upward trajectory continued into March 2021, reaching about 87.92 days, followed by a decrease to 74.80 days in June 2021, suggesting an improvement in working capital efficiency during that period.

However, the cycle expanded substantially in the latter half of 2021 and into 2022, reaching approximately 96.65 days in September 2021, then decreasing slightly to 86.85 days by December 2021. During 2022, the CCC exhibited relative stability initially but then rose significantly to around 127.98 days in September 2022, and further to 118.76 days by December 2022. The first quarter of 2023 saw the CCC increase again to roughly 123.61 days, maintaining elevated levels into mid-2023.

From September 2023 onward, the cycle continued to lengthen, peaking at approximately 167.56 days in December 2023. A slight reduction was observed in March 2024 to around 150.18 days, with the figure decreasing further to roughly 127.94 days by September 2024. The cycle then stabilized somewhat, ending at approximately 130.90 days in June 2025.

Overall, the data indicates a trend of increasing cash conversion cycle over the analyzed period. This suggests that Lumentum Holdings Inc. has experienced longer periods for converting its investments in inventory and receivables into cash, which could reflect changes in inventory management efficiency, accounts receivable collection practices, or supply chain dynamics. The significant fluctuations, especially the sharp increases towards the end of 2023, highlight periods of operational or strategic shifts influencing liquidity cycles.