Nextracker Inc. Class A Common Stock (NXT)

The liquidity ratios of Nextracker Inc. Class A Common Stock indicate the company's ability to meet its short-term obligations effectively.

1. Current Ratio:
- The current ratio has shown a consistent improvement over the years, from 1.49 in March 31, 2021, to 2.09 in March 31, 2025. This indicates that the company's current assets are more than sufficient to cover its current liabilities.
- The increasing trend suggests that Nextracker Inc. has enhanced its liquidity position and is better equipped to handle its short-term financial obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, measures the company's ability to meet its immediate liabilities using its most liquid assets.
- Although the quick ratio fluctuated slightly over the years, it generally remained above 1, indicating that Nextracker Inc. has an adequate level of liquid assets to cover its short-term liabilities without relying on inventory.

3. Cash Ratio:
- The cash ratio, which is the most stringent liquidity ratio, assesses the company's ability to pay off its current liabilities with its cash and cash equivalents alone.
- While the cash ratio increased from 0.56 in March 31, 2021, to 0.74 in March 31, 2025, it is relatively lower compared to the current and quick ratios, suggesting that Nextracker Inc. relies more on other liquid assets besides cash to meet its short-term obligations.

Overall, the liquidity ratios of Nextracker Inc. Class A Common Stock demonstrate a healthy liquidity position, with improving trends over the years. This indicates that the company is in a strong financial position to meet its current obligations efficiently and is well-prepared to address any short-term liquidity challenges that may arise.

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Additional liquidity measure

The cash conversion cycle of Nextracker Inc. Class A Common Stock has experienced fluctuations over the past five years. As of March 31, 2021, the company's cash conversion cycle was 26.20 days, indicating a relatively efficient management of cash flows.

However, over the subsequent years, the cash conversion cycle increased significantly, reaching 89.08 days as of March 31, 2022, and further escalating to 92.64 days by March 31, 2023. This suggests a potential delay in the company's ability to convert its investments into cash.

By March 31, 2024, there was a notable improvement in the cash conversion cycle, which decreased to 58.70 days, indicating a more efficient cycle compared to the previous years.

Surprisingly, by March 31, 2025, the cash conversion cycle turned negative at -12.07 days. A negative cash conversion cycle implies that the company is able to collect cash from customers before paying its suppliers, which may be a positive sign of efficient working capital management, aggressive receivables collection, and strong bargaining power with suppliers.

In summary, Nextracker Inc.'s cash conversion cycle has shown variability over the years, with a notable improvement in 2024 and an unexpectedly negative cycle in 2025, signaling different aspects of its cash flow management and operational efficiency.