Phibro Animal Health Corporation (PAHC)

The liquidity ratios of Phibro Animal Health Corporation over the specified periods reflect a generally stable and well-managed liquidity profile, though with some variations indicative of shifting liquidity positions.

Current Ratio: The current ratio has consistently remained above 2.7 throughout the analyzed timeframe, indicating a strong capacity to meet short-term obligations with current assets. Beginning at approximately 2.88 on September 30, 2020, it experienced minor fluctuations, peaking at 3.54 on March 31, 2023. After this peak, the ratio tapered slightly to 3.12 by December 31, 2023, and declined further to 2.76 by June 30, 2025. Despite the fluctuations, the ratio remains well above the generally accepted threshold of 1.0, signaling a sound liquidity position.

Quick Ratio: The quick ratio, which excludes inventory from current assets to assess immediate short-term liquidity, has hovered between approximately 1.01 and 1.56 during the period. It rose from around 1.35 in September 2020 to a high of 1.56 in September 2021, indicating increasing liquidity in terms of liquid assets relative to current liabilities. After this peak, the ratio remained relatively steady but exhibited a decline starting after December 2023, finally reaching around 1.01 by June 2025. The ratio’s maintenance above 1.0 suggests that the company generally possesses sufficient liquid assets to cover immediate liabilities.

Cash Ratio: The cash ratio, representing the most conservative liquidity measure, has remained below 0.6 across the period, signaling that cash holdings constitute a smaller proportion of current liabilities. Initially stable around 0.57 through 2020 and early 2021, the cash ratio experienced minor fluctuations, reaching a peak of 0.64 in September 2021. Subsequently, it showed a declining trend, falling to approximately 0.26 by June 2025. The persistent low cash ratio indicates reliance on other liquid assets besides cash to meet short-term obligations, which is typical for a well-managed operating cycle but suggests limited immediate cash liquidity.

Summary: The analyzed liquidity ratios collectively demonstrate that Phibro Animal Health Corporation maintains a robust liquidity position, with the current ratio consistently comfortably above 2.7, indicating ample coverage of short-term liabilities through its current assets. The quick ratio's staying above 1.0 further reinforces strong short-term liquidity, albeit with some decline toward the latter part of the period. Conversely, the cash ratio remains relatively low, reflecting a conservative cash holding strategy and reliance on other liquid assets to meet immediate liabilities. Overall, the company's liquidity profile indicates prudent management with sufficient liquidity cushions to support operational needs while executing strategic initiatives.

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Additional liquidity measure

The analysis of Phibro Animal Health Corporation's cash conversion cycle (CCC) over the specified periods reveals notable fluctuations and an overall upward trend in recent years.

Between September 2020 and September 2021, the CCC remained relatively stable, fluctuating within the range of approximately 153 to 160 days. This stability suggests consistent operational efficiency and liquidity management during this period. However, starting from December 2021, there was an observable increase in the CCC, reaching a peak of approximately 169.60 days at the end of 2022, and further escalating to 173.84 days by March 2023. This upward movement indicates that the company experienced longer durations in converting investments in inventory and receivables into cash, pointing towards potential challenges in receivables collection, inventory turnover, or both.

From June 2023 onwards, the CCC showed signs of slight reduction, decreasing to approximately 154.06 days by June 2024, then further to around 150.50 days in September 2024. This decline suggests improved efficiency in managing working capital components, possibly due to enhanced receivables collection or inventory management practices.

However, a significant shift occurred at the end of 2024, with the CCC surging to approximately 221.74 days in December 2024, indicating a substantial decline in operational efficiency or an increase in the time taken to convert inventory and receivables into cash. The subsequent periods, March and June 2025, showed reductions to approximately 202.59 and 188.90 days respectively, yet these figures remain considerably higher than historical levels prior to late 2024.

Overall, the trend reflects a period of relative stability in the early timeline, followed by a pronounced deterioration in cash conversion efficiency during late 2024 and into 2025. The long-term implications suggest increased working capital requirements and potential challenges in cash flow management, which could impact overall liquidity and operational agility.