Darling Ingredients Inc (DAR)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.86 | 1.78 | 1.85 | 1.73 | 1.53 | 1.52 | 1.59 | 1.55 | 1.45 | 1.46 | 1.48 | 1.48 | 1.46 | 1.49 | 1.54 | 1.43 | 1.33 | 1.43 | 1.53 | 1.60 |
| Quick ratio | 0.14 | 0.85 | 0.87 | 0.12 | 0.77 | 0.12 | 0.16 | 0.12 | 0.72 | 0.09 | 1.61 | 1.55 | 0.12 | 9.31 | 9.37 | 0.12 | 0.11 | 0.12 | 0.15 | 0.18 |
| Cash ratio | 0.13 | 0.12 | 0.11 | 0.12 | 0.12 | 0.12 | 0.16 | 0.12 | 0.09 | 0.09 | 1.61 | 1.55 | 0.12 | 9.31 | 9.37 | 0.12 | 0.11 | 0.12 | 0.15 | 0.18 |
Darling Ingredients Inc's liquidity ratios indicate its ability to meet short-term obligations. The current ratio has been fairly stable over the periods, staying above 1, which generally indicates the company can cover its current liabilities with its current assets. However, the quick ratio shows significant variability, with some periods below 1, suggesting a potential challenge in meeting immediate obligations without relying on inventory. The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, shows fluctuation but generally remains low, indicating a limited ability to meet short-term obligations solely with cash on hand. Overall, while the current ratio suggests good liquidity, the quick and cash ratios reveal potential fluctuations in short-term liquidity that may warrant further monitoring.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 20.47 | 65.68 | 63.35 | 49.06 | 52.10 | 43.41 | 43.55 | 40.19 | 49.71 | 42.95 | 40.84 | 42.93 | 42.88 | 45.22 | 43.84 | 42.37 | 40.53 | 39.49 | 39.24 | 38.20 |
The cash conversion cycle of Darling Ingredients Inc has fluctuated over the period shown. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales.
From Dec 31, 2019, to Dec 31, 2023, the cash conversion cycle has ranged from a low of 38.20 days to a high of 65.68 days. Generally, a shorter cash conversion cycle is preferred as it indicates that the company is efficiently managing its working capital.
The company experienced a significant increase in its cash conversion cycle between Sep 30, 2023, and Dec 31, 2023, from 43.41 days to 20.47 days. This reduction suggests that Darling Ingredients Inc has been able to improve its efficiency in managing its inventories and collecting payments from customers.
It is important for the company to monitor its cash conversion cycle regularly to ensure it is optimizing its working capital and maintaining a healthy liquidity position. Any prolonged increase in the cash conversion cycle could indicate inefficiencies in the company's operations and may require further investigation and potential corrective actions.