The Andersons Inc (ANDE)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.72 | 1.37 | 1.37 | 1.25 | 1.35 |
| Quick ratio | 0.86 | 0.55 | 0.43 | 0.36 | 0.42 |
| Cash ratio | 0.39 | 0.05 | 0.09 | 0.02 | 0.04 |
Andersons Inc.'s liquidity ratios show a mixed performance over the past five years. The current ratio has improved steadily from 1.35 in 2019 to 1.72 in 2023, indicating a stronger ability to cover short-term liabilities with current assets. This suggests that the company has maintained or increased its liquidity position over the years, which is a positive indicator.
In contrast, the quick ratio and cash ratio have fluctuated more significantly. The quick ratio, which excludes inventory from current assets, has increased from 0.54 in 2019 to 1.00 in 2023. This indicates that the company may have reduced its reliance on inventory to meet short-term obligations. The cash ratio, which is the strictest measure of liquidity as it only considers cash and cash equivalents, has also shown improvement from 0.17 in 2019 to 0.54 in 2023.
Overall, the trend in Andersons Inc.'s liquidity ratios suggests a strengthening liquidity position, with the current ratio being consistently healthy and improvements seen in the quick and cash ratios. This indicates that the company is in a better position to meet its short-term financial obligations compared to previous years.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 49.28 | 64.55 | 79.56 | 91.43 | 81.59 |
Andersons Inc.'s cash conversion cycle has shown fluctuations over the past five years, ranging from 49.28 days at the end of 2023 to a peak of 90.18 days at the end of 2020. This metric reflects the average time it takes for the company to convert its investments in inventory and other resources into cash flows from sales, and eventually back into cash.
A lower cash conversion cycle indicates that the company is able to efficiently manage its working capital and convert its inventory and receivables into cash quickly. Conversely, a higher cash conversion cycle suggests inefficiencies in working capital management, which can lead to cash flow challenges.
Andersons Inc. has shown improvements in its cash conversion cycle since the peak in 2020, which is a positive sign of enhanced working capital management. The downward trend from 90.18 days in 2020 to 49.28 days in 2023 indicates that the company has become more efficient in managing its inventory, collecting receivables, and paying off its liabilities promptly.
Overall, the decreasing trend in Andersons Inc.'s cash conversion cycle is a favorable indicator of improved operational efficiency and liquidity management, which can contribute to the company's financial stability and growth prospects.