Interpublic Group of Companies Inc (IPG)

Interpublic Group Of Cos., Inc.'s liquidity ratios reflect its ability to meet short-term obligations and cover immediate liabilities with its current assets. The current ratio has been gradually improving over the years, reaching 1.06 in 2023, indicating that the company has $1.06 in current assets for every $1 in current liabilities. This suggests an improving ability to cover short-term obligations.

Similarly, the quick ratio, which excludes inventory from current assets, also shows improvement over the years, remaining at 1.06 in 2023. This ratio is a more stringent measure of liquidity than the current ratio, as it focuses on assets that can quickly be converted to cash to meet short-term obligations.

The cash ratio, which is the most conservative measure of liquidity, has also shown a positive trend, reaching 0.28 in 2023. This ratio indicates the proportion of immediate liabilities that can be covered by cash and cash equivalents alone. Although the cash ratio is lower compared to the current and quick ratios, an increasing trend suggests an improvement in the company's ability to meet immediate cash requirements.

Overall, the liquidity ratios of Interpublic Group Of Cos., Inc. demonstrate a strengthening liquidity position over the years, indicating the company's ability to meet short-term obligations and manage liquidity effectively.

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Additional liquidity measure

The cash conversion cycle of Interpublic Group Of Cos., Inc. has exhibited some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 268.09 days compared to 245.13 days in 2022. This indicates that, on average, it took Interpublic Group Of Cos., Inc. 268.09 days to convert its investments in inventory and other resources into cash receipts from sales and then back into cash with payments to suppliers during the most recent year.

While the cash conversion cycle decreased in 2022 from the previous year, it remained relatively high compared to 2020 and 2019. The cash conversion cycle in 2021 was also notably high at 268.20 days. The company's ability to manage its inventory, receivables, and payables efficiently seems to have fluctuated in recent years, impacting its cash conversion cycle.

It is important for Interpublic Group Of Cos., Inc. to closely monitor and manage its cash conversion cycle to ensure optimal liquidity and operational efficiency. By streamlining processes related to inventory management, accounts receivable, and accounts payable, the company can potentially reduce the time it takes to convert investments into cash, thereby improving its overall financial performance and liquidity position.