Ingredion Incorporated (INGR)

Ingredion Incorporated's liquidity ratios have shown some fluctuations over the past five years.

1. Current Ratio:
- The current ratio measures a company's ability to cover its short-term obligations with its current assets. Ingredion's current ratio decreased from 2.46 in 2020 to 1.78 in 2021, indicating a potential decrease in short-term liquidity. The ratio continued to decline slightly in 2022 to 1.76 but then improved in 2023 to 1.92, suggesting a better ability to meet short-term liabilities. By 2024, the current ratio increased significantly to 2.62, indicating a stronger liquidity position.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Ingredion's quick ratio followed a similar trend to the current ratio, decreasing from 0.62 in 2020 to 0.22 in 2021. The ratio continued to decline in 2022 to 0.13, indicating a lower ability to cover immediate liabilities. However, the quick ratio improved in 2023 to 0.23 and then significantly rose to 0.79 in 2024, reflecting an enhanced ability to meet short-term obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio focuses solely on a company's ability to cover its short-term liabilities with cash and cash equivalents. Ingredion's cash ratio exhibited the same trend as the quick ratio, decreasing from 0.62 in 2020 to 0.22 in 2021 before declining further to 0.13 in 2022. The ratio improved in 2023 to 0.23 and then increased significantly to 0.79 in 2024, indicating a stronger liquidity position and a higher proportion of cash to current liabilities.

In conclusion, despite some fluctuations, Ingredion Incorporated's liquidity ratios have generally shown an improving trend in recent years, especially in 2024, indicating enhanced liquidity and the company's ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Ingredion Incorporated has shown variations over the five-year period from December 31, 2020, to December 31, 2024.

- In 2020, the company had a cash conversion cycle of 70.99 days, indicating that it took approximately 71 days for Ingredion to convert its investments in inventory and receivables into cash.
- This number increased to 76.90 days by the end of 2021, suggesting a slight delay in the cash conversion process compared to the previous year.
- By the end of 2022, the cash conversion cycle further extended to 90.34 days, signaling a significant increase in the time taken to convert input costs to cash receipts.
- In 2023, there was a slight improvement as the cash conversion cycle decreased to 82.55 days, yet it remained higher than the levels observed in the earlier years.
- Finally, by the end of 2024, the cash conversion cycle decreased again to 76.83 days, showing a partial recovery from the peak observed in 2022.

Overall, the trend in Ingredion's cash conversion cycle indicates fluctuating efficiency in managing its working capital components over the years, with the company experiencing challenges in optimizing the conversion of its resources into cash. Further analysis would be required to understand the specific factors influencing these changes and to determine strategies for improving the cash conversion cycle in the future.