OSI Systems Inc (OSIS)

The liquidity ratios of OSI Systems Inc. over the period from June 2021 to June 2025 reveal a fluctuating but generally improving liquidity position.

The current ratio, which measures the company’s ability to meet its short-term obligations with its short-term assets, declined from 2.06 in June 2021 to a low of 1.22 in June 2022. Following this decline, there was a partial recovery, with the ratio reaching 1.47 in June 2023, slightly increasing to 1.49 in June 2024, and further rising to 2.04 in June 2025. The ratio remains above 1.0 throughout this period, indicating that the company's current assets consistently exceeded its current liabilities, although the decline in 2022 suggests a period of reduced short-term liquidity which then improved in subsequent years.

The quick ratio, which excludes inventory to assess the company's immediate liquidity, followed a similar trend. It decreased sharply from 1.08 in June 2021 to 0.61 in June 2022, indicating a diminished capacity to cover short-term liabilities with easily liquidatable assets. Subsequently, the quick ratio improved, reaching 0.80 in June 2023, 0.91 in June 2024, and 1.35 in June 2025. This progression reflects improved management of liquid assets and a strengthening near-term liquidity position.

The cash ratio, a more conservative measure of liquidity that considers only cash and cash equivalents, demonstrated the most significant fluctuation. It declined from 0.23 in June 2021 to 0.10 in June 2022, the lowest point in the period, before gradually increasing to 0.13 in June 2023, slightly decreasing again in June 2024 to 0.12, and rising modestly to 0.15 in June 2025. Despite the overall upward trend after 2022, the cash ratio remains below 0.25 throughout, indicating that the company's immediate cash holdings are relatively modest compared to its current liabilities.

In summary, OSI Systems Inc.'s liquidity ratios showed a significant dip in 2022, followed by a gradual recovery in subsequent years. While the current and quick ratios suggest improved short-term liquidity and ability to meet obligations without relying on inventory, the cash ratio indicates limited immediate cash resources at all times. This pattern may imply a strategic emphasis on managing short-term liabilities with a broader base of assets rather than immediate cash holdings.

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Additional liquidity measure

The cash conversion cycle (CCC) of OSI Systems Inc. over the five-year period from June 30, 2021, to June 30, 2025, exhibits notable fluctuations indicating variations in operational efficiency and working capital management.

On June 30, 2021, the CCC was approximately 169.29 days. This figure increased significantly by June 30, 2022, reaching roughly 195.39 days, representing an elevation of approximately 26 days. The upward trend persisted into June 30, 2023, with the cycle marginally decreasing to around 194.40 days, a slight reduction of approximately 1 day compared to the previous year.

However, the cycle experienced a substantial rise again by June 30, 2024, to approximately 228.60 days, marking an increase of roughly 34 days from the prior year. The most recent data, as of June 30, 2025, indicates a slight decline in the CCC to approximately 219.29 days, a reduction of about 9 days from 2024 but still significantly elevated compared to 2022 and 2021 levels.

Overall, the trend indicates an increasing trend in OSI Systems Inc.'s cash conversion cycle over this period, peaking in 2024, before a modest improvement in 2025. This pattern suggests a lengthening of the time taken to convert investments in inventory and receivables into cash, which could be indicative of extended inventory holding periods, slower receivables collection, or changes in supplier payment terms. The persistent elevation in the CCC warrants further analysis into the company’s operational and credit management strategies to assess potential impacts on liquidity and working capital needs.