International Flavors & Fragrances Inc (IFF)

International Flavors & Fragrances Inc's liquidity position, as reflected in its liquidity ratios, has shown some fluctuation over the years under consideration.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. The trend of the current ratio has been positive, increasing from 1.61 in 2020 to 1.84 in 2024. A current ratio above 1 suggests that the company has more current assets than current liabilities, providing a buffer for meeting upcoming obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a stricter measure of liquidity by excluding inventories from current assets. International Flavors & Fragrances Inc's quick ratio decreased from 0.35 in 2020 to 0.11 in 2024. A quick ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities without relying on the sale of inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio as it considers only cash and cash equivalents to cover current liabilities immediately. The cash ratio for International Flavors & Fragrances Inc has shown a similar decreasing trend from 0.35 in 2020 to 0.11 in 2024. This indicates the company's potential challenges in meeting its immediate obligations solely with cash on hand.

Overall, while the current ratio of International Flavors & Fragrances Inc has improved over the years, the quick ratio and cash ratio have declined significantly, raising concerns about the company's ability to quickly meet its short-term obligations without relying on inventory or other current assets. It might be advisable for the company to closely monitor and manage its liquidity position to ensure financial stability and operational resilience in the future.

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Additional liquidity measure

The cash conversion cycle of International Flavors & Fragrances Inc has experienced fluctuations over the past five years. As of December 31, 2020, the company had a cash conversion cycle of 137.78 days, which decreased to 115.94 days by December 31, 2021. However, by December 31, 2022, the cash conversion cycle increased to 138.75 days before returning to 115.94 days by December 31, 2023. The cycle further improved to 105.78 days by December 31, 2024.

Overall, the company has shown variability in its cash conversion cycle performance, indicating potential changes in its working capital management efficiency and the time it takes to convert its inputs into cash inflows. Strategies to maintain a shorter cash conversion cycle can help improve liquidity and profitability in the long run.