Viavi Solutions Inc (VIAV)

The liquidity ratios of Viavi Solutions Inc. over the analyzed period reveal fluctuations and trends indicative of the company's short-term financial health and ability to meet its obligations.

The Current Ratio, which measures the company's capacity to cover current liabilities with current assets, generally remained robust throughout the period, with values well above 1.0, signaling adequate liquidity. Starting at 4.23 as of September 30, 2020, the current ratio experienced fluctuations, peaking at 4.56 in September 2021 and reaching a lower point of 1.53 in March 2025. Notably, there was a significant decline during the period ending June 30, 2021, to 1.58, which persisted with some variability to a low of 1.50 in June 2025. Despite this, the ratio remained above 1.5 in the most recent periods, suggesting that the company retains sufficient working capital to cover short-term liabilities, albeit with a narrower margin compared to earlier years.

The Quick Ratio, excluding inventories to assess immediate liquidity, followed a similar pattern. It ranged from a high of 3.97 on September 30, 2021, to a low of 1.16 on June 30, 2025. This indicates that the company's most liquid assets have retained a strong position, with the quick ratio consistently above 1.0 during most periods, supporting the company's ability to meet urgent obligations without relying on inventory liquidation.

The Cash Ratio, reflecting the most conservative view of liquidity by considering only cash and cash equivalents, also demonstrated variability, with values largely above 1.0 except in the latest entries. Beginning at 2.60 on September 30, 2020, the ratio peaked at 3.14 in September 2021 and generally trended downward over time, reaching 0.72 by June 30, 2025. Such a decline suggests a reduction in cash holdings relative to short-term liabilities, potentially indicating strategic shifts in liquidity management or cash utilization.

Overall, while all three liquidity ratios—Current, Quick, and Cash—declined from their peak levels in 2020 and 2021, they generally remained above 1.0 until the most recent periods. This persistence indicates that Viavi Solutions Inc. has maintained sufficient liquidity to meet its short-term obligations throughout the analyzed timeframe. However, the downward trends, especially in cash holdings, highlight a possible tightening of liquidity buffers, warranting ongoing monitoring for potential liquidity risks in the future.

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Additional liquidity measure

The cash conversion cycle (CCC) of Viavi Solutions Inc. has demonstrated notable fluctuations over the analyzed periods. Starting at approximately 105 days on September 30, 2020, the cycle experienced a gradual increase, reaching a peak of around 146.64 days as of December 31, 2023. This upward trend signifies a lengthening of the time required to convert investments in inventory and receivables into cash, potentially indicating rising days sales outstanding (DSO), days inventory outstanding (DIO), or a combination of both.

Throughout 2020 and early 2021, the CCC fluctuated modestly, remaining close to 110–111 days, suggesting relative stability in the company's working capital management during that period. However, starting in late 2022 and into 2023, the cycle began to extend more significantly, with notable increases recorded in the final quarter of 2023, reaching over 146 days. This substantial elongation indicates increased delays in receivables collection, inventory turnover, or both, which could be attributed to changes in customer payment terms, supply chain disruptions, or strategic shifts in inventory management.

Subsequent periods show some reduction in the CCC, with the figure decreasing to approximately 117 days by March 2024, implying a partial improvement in cash conversion efficiency. Nevertheless, the cycle remains relatively elevated, and in the next period, it resurged to around 137 days, suggesting continued challenges in maintaining efficient cash flows.

Overall, the long-term trend reflects a period of increased working capital deployment, with a substantial rise in the cash conversion cycle from approximately 105 days in 2020 to over 137 days in 2025. This trend warrants scrutiny into the company’s accounts receivable and inventory strategies, as persistent elongation of the CCC can impact liquidity and operational efficiency.