Viavi Solutions Inc (VIAV)

The liquidity ratios of Viavi Solutions Inc. over the period from June 30, 2021, to June 30, 2025, reveal several notable trends. The current ratio, which measures the company's ability to meet short-term obligations with its total current assets, exhibited a moderate increase from 1.49 in 2021 to a peak of 3.55 in 2024, before declining sharply to 1.50 in 2025. This fluctuation indicates an initially improving liquidity position, reaching a relatively comfortable level in 2024, followed by a significant reduction in 2025, bringing the current ratio back to levels comparable to 2021.

Similarly, the quick ratio, reflecting the company's capacity to cover short-term liabilities with its most liquid assets (excluding inventory), followed an upward trend from 1.28 in 2021 to 2.23 in 2022, and remained relatively stable at around 2.19 in 2023. It then increased substantially to 2.98 in 2024 before decreasing to 1.17 in 2025, indicating a similar pattern of contraction after a peak, which may suggest reduced liquidity or a change in current asset composition.

The cash ratio, representing the proportion of current liabilities fully covered by cash and cash equivalents, showed a consistent increase from 0.94 in 2021 to 1.52 in 2022 and 2023, peaking at 1.99 in 2024. However, in 2025, this ratio declined sharply to 0.73, falling below the earlier levels observed in 2021, signaling a significant decrease in available cash relative to current liabilities.

Overall, the data suggests that Viavi Solutions Inc.'s liquidity was strengthening through 2022 and 2024, reaching relatively healthy levels that imply good short-term financial health during those years. Nonetheless, the 2025 decline across all liquidity ratios underscores a deterioration in the company's short-term solvency position, which warrants further investigation into potential causes such as increased current liabilities, reduced liquid assets, or strategic shifts affecting liquidity.

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Additional liquidity measure

The analysis of Viavi Solutions Inc.'s cash conversion cycle (CCC) over the period from June 30, 2021, to June 30, 2025, reveals a trend of gradual elongation in the cycle. Specifically, the CCC was 101.97 days as of June 30, 2021, and increased to 110.12 days by June 30, 2022, indicating a slight extension in the period it takes the company to convert its investments into cash. This upward movement continued, with the cycle reaching 130.11 days on June 30, 2023. Subsequently, the CCC experienced a marginal decrease to 128.99 days in 2024 and further to 126.15 days in 2025.

The overall trend suggests that Viavi Solutions Inc. has been experiencing a lengthening of its cash conversion cycle over the observed years, with the longest duration recorded in mid-2023. The slight decrease observed in 2024 and 2025 may imply a modest improvement in operational efficiencies or changes in working capital management, but the cycle remains significantly longer compared to 2021.

This elongation of the CCC could imply that the company is facing increased collection periods, extended inventory holding times, or lengthier accounts payable periods. Such a trend warrants careful consideration, as a longer cash conversion cycle can tie up working capital and potentially impact liquidity positions if not managed effectively. Overall, these fluctuations highlight the importance of monitoring operational efficiency and cash flow management strategies within Viavi Solutions Inc. to maintain optimal liquidity and operational health.