Ingredion Incorporated (INGR)

Short-term

Turnover ratios

Ingredion Incorporated's activity ratios can provide insights into how efficiently the company is managing its assets and working capital. Let's analyze the key ratios based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a specific period.
- Ingredion's inventory turnover has fluctuated over the years, declining from 5.14 in 2020 to 4.75 in 2021, then dropping further to 4.04 in 2022, before recovering to 4.75 in 2024. This suggests that the company may have experienced challenges in managing its inventory efficiently in 2022 but improved this aspect by 2024.

2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company collects payments from its credit customers.
- The data provided indicates that Ingredion has not reported receivables turnover figures for the years under review. This lack of information may indicate that the company may not have significant credit sales or that there is a reporting discrepancy.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly a company pays its suppliers.
- Similar to receivables turnover, the data shows that Ingredion has not disclosed payables turnover figures for the years specified. This lack of information may make it challenging to assess how effectively the company manages its payables.

4. Working Capital Turnover:
- The working capital turnover ratio measures the efficiency of a company in generating sales revenue relative to its working capital.
- Ingredion's working capital turnover has exhibited fluctuations, peaking at 5.82 in 2021 and dropping to 3.58 in 2024. A higher ratio generally indicates a more efficient use of working capital to generate sales.

In summary, based on the data provided, Ingredion Incorporated has shown variability in its inventory turnover and working capital turnover ratios over the years, suggesting fluctuations in how efficiently the company is managing its inventory and working capital. However, the absence of information on receivables and payables turnover ratios limits a comprehensive assessment of the company's overall activity efficiency.

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Average number of days

The activity ratios of Ingredion Incorporated provide insights into the management of its assets and liabilities in relation to sales and operations.

1. Days of Inventory on Hand (DOH):
- The DOH ratio measures the average number of days it takes for the company to turn its inventory into sales.
- Ingredion's DOH has shown a fluctuating trend over the years, increasing from 70.99 days in 2020 to 90.34 days in 2022 and then decreasing to 76.83 days in 2024.
- A higher DOH value may indicate slow-moving inventory, potentially tying up working capital and leading to increased carrying costs.

2. Days of Sales Outstanding (DSO):
- The DSO ratio represents the average number of days it takes for the company to collect its accounts receivable.
- The data provided shows that specific values for DSO are not available for the years under review.
- In general, a high DSO may signal potential issues with collecting receivables promptly, impacting cash flow and liquidity.

3. Number of Days of Payables:
- This ratio calculates the average number of days it takes for the company to pay its suppliers.
- Similar to DSO, specific values for the Number of Days of Payables are not provided for the years in question.
- A higher number of days of payables could indicate a more extended payment period, which may positively impact cash flow but potentially strain relationships with suppliers.

In conclusion, analyzing these activity ratios can help assess Ingredion's efficiency in managing its inventory, receivables, and payables, providing valuable insights into its working capital management and potential operational challenges or strengths.

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Long-term

Ingredion Incorporated's long-term activity ratios show improvement over the years, indicating a more efficient utilization of assets.

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how effectively the company generates sales from its fixed assets. The trend shows a consistent increase from 2.44 in 2020 to 3.30 in 2022. This suggests that the company is generating more revenue for every dollar invested in fixed assets, indicating improved efficiency in asset utilization.

2. Total Asset Turnover: The total asset turnover ratio indicates how well the company is utilizing all its assets to generate sales. The ratio has also shown an upward trend, increasing from 0.87 in 2020 to 1.00 in 2024. This improvement signifies that Ingredion is generating more revenue relative to its total assets, reflecting enhanced efficiency in asset management and utilization.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios reflects Ingredion's ability to generate more sales from its assets, indicating improved operational efficiency and potential profitability.