Ingredion Incorporated (INGR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.47 | 4.08 | 5.12 | 5.31 | 5.81 |
| Receivables turnover | 6.38 | 5.63 | 6.10 | 5.90 | 6.35 |
| Payables turnover | 8.33 | 7.46 | 7.76 | 8.13 | 9.93 |
| Working capital turnover | 5.02 | 5.57 | 5.82 | 5.02 | 5.20 |
Ingredion Inc's activity ratios provide insights into the efficiency of the company in managing its inventory, receivables, payables, and working capital.
1. Inventory Turnover:
Ingredion Inc's inventory turnover has fluctuated over the past five years, ranging from 4.04 to 5.69 times. The decreasing trend from 2019 to 2023 indicates that the company is holding onto inventory for a longer period before selling it. This may suggest potential issues with inventory management and sales strategy.
2. Receivables Turnover:
The company's receivables turnover has also varied, showing a range of 5.63 to 6.38 times over the same period. The increasing trend from 2019 to 2023 indicates that Ingredion Inc has been collecting its accounts receivable at a faster rate, which is positive for cash flow and liquidity.
3. Payables Turnover:
Ingredion Inc's payables turnover has fluctuated between 7.19 and 9.72 times, with a general decreasing trend from 2019 to 2023. This suggests that the company is taking longer to pay its suppliers, potentially indicating strained supplier relationships or cash flow constraints.
4. Working Capital Turnover:
The working capital turnover ratio measures the efficiency of using working capital to generate sales. Ingredion Inc's working capital turnover has ranged from 5.02 to 5.82 times. The slight fluctuations suggest consistent efficiency in utilizing its working capital to support business operations and revenue generation.
Overall, while the company has shown improvements in receivables turnover and relatively stable working capital turnover, the decreasing trends in inventory turnover and payables turnover warrant further investigation into inventory management practices and supplier payment policies.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 81.66 | 89.51 | 71.26 | 68.70 | 62.80 |
| Days of sales outstanding (DSO) | days | 57.21 | 64.81 | 59.83 | 61.85 | 57.52 |
| Number of days of payables | days | 43.82 | 48.93 | 47.06 | 44.88 | 36.76 |
The activity ratios of Ingredion Inc over the past five years reflect its efficiency in managing its inventory, receivables, and payables.
1. Days of inventory on hand (DOH):
- Ingredion Inc's days of inventory on hand has been fluctuating over the years, ranging from 64.18 days in 2019 to 90.34 days in 2022. A decreasing trend is observed from 2019 to 2021, indicating efficient management of inventory levels. However, there was a slight increase in 2022 and a subsequent decrease in 2023, suggesting some variability in inventory management efficiency.
2. Days of sales outstanding (DSO):
- The days of sales outstanding for Ingredion Inc have also been fluctuating, ranging from 57.43 days in 2019 to 64.81 days in 2022. A lower DSO indicates a faster collection of accounts receivable, which improved in 2019 compared to 2022. The decrease in 2023 to 57.21 days reflects a positive trend in receivables management.
3. Number of days of payables:
- Ingredion Inc's number of days of payables has generally been increasing over the years, with a range from 37.57 days in 2019 to 50.78 days in 2021. A higher number of days of payables signifies a longer time taken to pay suppliers, which can be beneficial for cash flow management. The increase from 2020 to 2021 indicates a potential strategy to extend payment terms, although the decrease in 2023 to 44.29 days suggests a shift in payables management.
Overall, the activity ratios display a mix of efficiency and variability in managing inventory, receivables, and payables for Ingredion Inc over the analyzed period. Monitoring these ratios allows stakeholders to assess the company's operational effectiveness and cash flow management practices.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.44 | 3.30 | 2.85 | 2.43 | 2.69 |
| Total asset turnover | 1.07 | 1.05 | 0.98 | 0.87 | 1.03 |
The long-term activity ratios of Ingredion Inc, specifically the fixed asset turnover and total asset turnover, demonstrate the efficiency of the company in generating revenue relative to its assets over the past five years.
The fixed asset turnover, which measures how efficiently the company utilizes its fixed assets to generate sales, has shown a generally increasing trend from 2.69 in 2019 to 3.44 in 2023. This indicates an improvement in the company's ability to generate sales from its fixed assets over the years.
On the other hand, the total asset turnover, which evaluates the company's efficiency in generating revenue from all its assets, has fluctuated over the same period. The ratio has ranged from 0.87 in 2020 to 1.07 in 2023. Even though there was some variability, the company managed to improve its total asset turnover by the end of 2023 compared to the ratio in 2019.
Overall, both the fixed asset turnover and total asset turnover ratios suggest that Ingredion Inc has enhanced its efficiency in utilizing both fixed and total assets to generate sales, which is a positive indicator for the company's operational performance and potential profitability.