Fresh Del Monte Produce Inc (FDP)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.12 | 2.05 | 1.74 | 1.82 | 1.87 |
| Quick ratio | 1.04 | 0.86 | 0.78 | 0.82 | 0.89 |
| Cash ratio | 0.06 | 0.03 | 0.03 | 0.03 | 0.06 |
Fresh Del Monte Produce Inc's liquidity ratios have shown mixed trends over the past five years.
The current ratio has generally improved from 1.87 in 2019 to 2.12 in 2023. A current ratio above 1 indicates that the company has more current assets than current liabilities to cover its short-term obligations. Fresh Del Monte Produce Inc's current ratio has been consistently above 1, indicating a healthy liquidity position.
The quick ratio, also known as the acid-test ratio, measures the company's ability to meet short-term obligations with its most liquid assets. The trend for Fresh Del Monte Produce Inc's quick ratio has been fluctuating, with a decrease from 0.89 in 2019 to 0.78 in 2021, followed by an improvement to 1.04 in 2023. Although the ratio has been below 1 in some years, suggesting potential difficulties in meeting immediate obligations without relying on inventory, the recent increase indicates an enhanced ability to cover short-term liabilities with more liquid assets.
The cash ratio, which is the most conservative measure of liquidity, shows the company's ability to cover its short-term liabilities with cash and cash equivalents. Fresh Del Monte Produce Inc's cash ratio has varied over the years, reaching its highest point of 0.06 in 2019 and 2023, with the lowest point at 0.03 in 2021 and 2022. While the cash ratio remains relatively low, indicating a high reliance on non-cash current assets, the recent improvement suggests a better ability to meet short-term obligations with cash on hand.
In conclusion, Fresh Del Monte Produce Inc's liquidity ratios demonstrate overall sound liquidity position, with improvements in the current and cash ratios in the most recent years. However, the company should continue monitoring and managing its liquidity levels to ensure it can meet its short-term obligations effectively.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 73.89 | 72.00 | 64.20 | 57.41 | 59.27 |
The cash conversion cycle of Fresh Del Monte Produce Inc has seen fluctuations over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
In 2023, the cash conversion cycle increased to 73.89 days from 72.00 days in 2022. This indicates that the company took longer to convert its resources into cash flows from sales in 2023 compared to the previous year, potentially signaling inefficiencies in managing its working capital.
Looking back further, in 2021 the cash conversion cycle was 64.20 days, followed by 57.41 days in 2020 and 59.27 days in 2019. The decreasing trend from 2021 to 2020 suggests that the company improved its efficiency in managing its working capital during that period.
Overall, the fluctuations in the cash conversion cycle of Fresh Del Monte Produce Inc over the past five years highlight the company's ability to effectively manage its working capital and convert its investments into cash flows. Further analysis and comparison with industry benchmarks may provide additional insights into the company's operational efficiency.