Installed Building Products Inc (IBP)

Installed Building Products Inc's liquidity ratios show a generally healthy liquidity position over the past five years.

The current ratio, a measure of short-term liquidity, improved steadily from 2.64 in 2020 to 2.94 in 2024. This indicates that the company had more than enough current assets to cover its current liabilities throughout this period.

In contrast, the quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, fluctuated more. It increased significantly from 0.98 in 2020 to 1.39 in 2021, dipped to 0.70 in 2022, and then recovered to 1.12 in 2023 before dropping slightly to 0.91 in 2024. Despite the fluctuations, the quick ratio generally stayed above the acceptable industry benchmark of 1.0, indicating the company's ability to cover its short-term obligations without relying on inventory.

The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, maintained a similar trend to the quick ratio, fluctuating between 0.70 and 1.39 over the five-year period. The company had a strong ability to cover its current liabilities with cash on hand, although the ratio decreased slightly by the end of 2024.

Overall, the liquidity ratios suggest that Installed Building Products Inc managed its short-term obligations effectively and had sufficient liquid assets to meet its financial commitments during the period under review.

---

Additional liquidity measure

Installed Building Products Inc's cash conversion cycle has shown a fluctuating trend over the past five years. The cycle, which indicates the time it takes for the company to convert its resources invested in inventory into cash received from sales, increased from 24.64 days in 2020 to 37.86 days in 2021. However, in the following years, there was a slight decrease in the cycle, reaching 35.00 days in 2022 and further reducing to 32.16 days in 2023, before rising again to 36.49 days in 2024.

Overall, there seems to be some variability in the efficiency of Installed Building Products Inc's cash conversion cycle, with improvements seen in certain years while experiencing a slight increase in others. This fluctuation may suggest changes in the company's inventory management practices or the timing of cash receipts from customers, which could be further analyzed to optimize working capital efficiency.