Ingredion Incorporated (INGR)

Ingredion Incorporated's liquidity ratios, as represented by the current ratio, quick ratio, and cash ratio, have displayed some fluctuations over the provided periods.

1. Current Ratio: The company's current ratio ranged from a low of 1.68 on September 30, 2022, to a high of 2.67 on September 30, 2024. Overall, the current ratio has generally remained above 1, indicating that Ingredion has had more current assets than current liabilities to meet its short-term obligations. However, a decline in the current ratio in recent periods may suggest a potential liquidity challenge.

2. Quick Ratio: Ingredion's quick ratio, which measures the company's ability to pay off its current liabilities without relying on the sale of inventory, ranged from 0.12 on March 31, 2023, to 0.79 on December 31, 2024. The quick ratio indicates the company's ability to meet short-term obligations with its most liquid assets. The fluctuation in the quick ratio may imply variations in the company's ability to cover its immediate liabilities.

3. Cash Ratio: The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, mimicked the trends seen in the quick ratio, with the ratio ranging from 0.12 on March 31, 2023, to 0.79 on December 31, 2024. An improvement in the cash ratio typically signifies a stronger liquidity position as the company has more cash on hand to cover its short-term obligations.

In summary, while Ingredion showcased relatively healthy liquidity positions with current ratios above 1, the fluctuating quick and cash ratios suggest that the company's ability to meet short-term obligations with highly liquid assets has varied over the periods examined. Continuous monitoring of these ratios is essential to gauge the company's liquidity health accurately.

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Additional liquidity measure

The cash conversion cycle of Ingredion Incorporated has experienced fluctuations over the years, reflecting the company's efficiency in managing its working capital. The cash conversion cycle, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, stood at around 63-77 days between March 2020 and June 2024.

During this period, there was a general increase in the cash conversion cycle, indicating a potential lengthening of the time taken by Ingredion to convert its investments into cash. The gradual rise, from approximately 63.88 days in March 2020 to around 78.73 days in December 2024, may raise concerns about the company's ability to efficiently manage its working capital and liquidity.

Furthermore, the most significant increase in the cash conversion cycle occurred from March 2023 to June 2024, peaking at 92.12 days before starting to decline slightly. This substantial rise could reflect challenges in inventory management, collection of receivables, or delays in payment to suppliers. It is crucial for the company to closely monitor and address the factors contributing to the lengthening of the cash conversion cycle to ensure optimal working capital management and operational efficiency.