Standex International Corporation (SXI)

The liquidity position of Standex International Corporation over the period analyzed demonstrates notable fluctuations across key ratios, reflecting shifts in the company's ability to meet its short-term obligations.

The current ratio, which measures the company's capacity to cover current liabilities with current assets, generally remained above the generally acceptable threshold of 2.0 throughout the period. It decreased from 2.61 on June 30, 2021, to 2.51 on June 30, 2022, indicating a slight moderation but still signifying strong liquidity. Subsequently, there was a significant increase to 3.43 in June 30, 2023, suggesting an improved short-term asset cushion. The ratio maintained a high level at 3.37 on June 30, 2024 but declined somewhat to 2.88 by June 30, 2025, yet remaining well above the critical level, indicating continued liquidity strength.

The quick ratio, which evaluates the company's immediate liquidity excluding inventory, followed a somewhat different trend. It declined from 1.82 on June 30, 2021, to 1.64 in 2022, implying a slight reduction in the company's ability to settle short-term liabilities without relying on inventory. Thereafter, the quick ratio experienced a substantial increase to 2.56 in June 2023, indicating a marked improvement in the company's immediate liquidity position. It remained relatively stable in 2024 at 2.55 but declined to 1.66 in 2025, reflecting a contraction in short-term immediate liquidity but still maintaining a ratio above 1.0, which generally signifies sufficient liquidity to cover current liabilities without inventory.

The cash ratio, the most conservative measure of liquidity, indicates holdings of cash and cash equivalents relative to current liabilities. This ratio showed considerable variation, starting at 0.95 in 2021, decreased to 0.70 in 2022, then surged to 1.46 in 2023. The subsequent decline to 1.25 in 2024 and further reduction to 0.63 in 2025 signals notable fluctuations in cash holdings relative to current liabilities. Despite these variances, the cash ratio remained mostly below 1.0 during the period, suggesting that the company relied on other current assets besides cash to meet its short-term obligations.

Overall, the analysis reflects a company with solid overall liquidity measured by the current ratio, consistently maintaining a comfortable margin to cover short-term liabilities. The quick ratio's improvements and fluctuations suggest adjustments in asset composition and liquidity management strategies. The variations in the cash ratio point to changes in cash reserves and operational cash flow management. These trends collectively depict a company maintaining adequate liquidity levels, with periods of strengthening likely aligned with strategic shifts or operational needs, while fluctuations in cash holdings suggest ongoing liquidity management considerations.

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Additional liquidity measure

The data indicates a persistent and gradual elongation of the cash conversion cycle (CCC) for Standex International Corporation over the five-year period from June 30, 2021, to June 30, 2025. Specifically, the CCC increased from approximately 84.51 days in 2021 to 111.10 days in 2025.

This trend suggests that the company's net operating cycle—comprising the days sales outstanding (DSO), days inventory on hand (DIO), and days payable outstanding (DPO)—is extending over time. The incremental rise of roughly 4.02 days per year reflects a lengthening in how long it takes for the company to convert its investments in inventory and receivables into cash, relative to its payables.

Several potential factors may contribute to this elongation. An increase in the average collection period (higher DSO) implies that customers are taking longer to settle their invoices. A lengthening inventory turnover (higher DIO) could suggest slower inventory liquidation or changes in procurement, stock levels, or supply chain efficiencies. Conversely, if the DPO remains static or declines, the company might be delaying repayment to suppliers or experiencing less favorable credit terms, which can also impact the CCC.

Overall, the rising trend in the cash conversion cycle indicates a growing period during which cash is tied up in operations. This extended cycle could exert pressure on working capital management and liquidity position, demanding careful monitoring to mitigate any adverse impacts on financial flexibility and operational efficiency.