ScanSource Inc (SCSC)

The liquidity ratios of ScanSource Inc. over the period from June 30, 2021, to June 30, 2025, demonstrate a generally improving liquidity position, with notable trends across the current, quick, and cash ratios.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, shows a steady increase over the analyzed period. Specifically, it rose from 1.66 in June 2021 to 2.11 in June 2023, indicating a strengthening of liquidity and an improved buffer to cover liabilities. Although there was a slight decline to 2.10 in June 2024 and further to 2.01 in June 2025, the ratios remain comfortably above 1.5, signifying consistent short-term solvency.

The quick ratio, which excludes inventory from current assets to assess more liquid assets available to cover immediate obligations, also exhibits improvement. It increased from 0.86 in June 2021 to 1.11 in June 2023, crossing the threshold of 1. in subsequent years, reaching 1.15 in June 2024 and slightly decreasing to 1.12 in June 2025. This trend indicates an enhancement in the company's liquidity position, with a greater proportion of liquid assets readily available to meet short-term liabilities.

The cash ratio, a more conservative measure of liquidity focusing solely on cash and cash equivalents relative to current liabilities, reflects a different pattern. It declined from 0.09 in June 2021 to 0.05 in June 2022 and 2023, suggesting limited cash reserves during these periods. However, a notable increase is observed in June 2024, where the ratio rises sharply to 0.28, indicating an improved cash position. The ratio then declines again to 0.18 in June 2025, yet remains higher than the earlier years, signifying a relative strengthening of cash liquidity compared to previous periods.

Overall, the trend across these liquidity ratios demonstrates that ScanSource Inc. has been improving its short-term liquidity position over the analyzed period. The increasing current and quick ratios suggest a more robust position to meet immediate and short-term obligations. Although the cash ratio experienced fluctuations, the recent increase points to a healthier cash reserve level, contributing positively to the company's liquidity profile.

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Additional liquidity measure

The cash conversion cycle (CCC) for ScanSource Inc. exhibits notable fluctuations over the analyzed period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the CCC was approximately 44.44 days, indicating that the company took about a month and a half to convert its investments in inventory and receivables into cash.

By June 30, 2022, the CCC increased significantly to approximately 63.74 days, representing a deterioration of roughly 19.3 days. This suggests a slowdown in the company's ability to quickly convert its working capital into cash, potentially due to longer inventory holding periods, delayed receivables collection, or both.

The trend continued upward, with the CCC peaking at approximately 87.56 days as of June 30, 2023. This indicates that the company required nearly three months to complete the cash conversion cycle, possibly reflecting inefficiencies or strategic shifts in inventory management or receivables practices during that period.

Subsequently, a downward correction occurred, with the CCC decreasing to approximately 55.59 days as of June 30, 2024. Although this is an improvement, it remains considerably higher than the figures from 2021 and 2022, indicating ongoing challenges in managing the cash conversion process.

Finally, by June 30, 2025, the CCC slightly increased again to approximately 60.37 days, maintaining a level above the initial 2021 figure but below the peak in 2023. Overall, the data portrays a period of increased working capital management challenges culminating around mid-2023, followed by partial improvements but sustained elevated cycle times into 2025.