MGP Ingredients Inc (MGPI)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 642,597 | 605,749 | 502,136 | 341,280 | 315,503 |
| Payables | US$ in thousands | 73,594 | 66,432 | 53,712 | 30,273 | 29,511 |
| Payables turnover | 8.73 | 9.12 | 9.35 | 11.27 | 10.69 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $642,597K ÷ $73,594K
= 8.73
The payables turnover ratio for MGP Ingredients, Inc. has shown a consistent decreasing trend over the past five years. In 2023, the payables turnover ratio decreased to 7.23 from 7.96 in 2022 and remained at the same level as in 2021. This decreasing trend suggests that the company is taking longer to pay its suppliers compared to previous years.
A payables turnover ratio below 1 indicates that the company is taking more time to pay its suppliers than the industry average. In this case, with payables turnover ratios well above 1, MGP Ingredients, Inc. has been effectively managing its payables by paying its suppliers more frequently compared to the industry benchmark.
It is important to note that a decreasing payables turnover ratio may indicate that the company is facing liquidity issues, experiencing challenges in managing cash flow efficiently, or renegotiating payment terms with its suppliers. Further analysis of the company's cash conversion cycle and other liquidity ratios would provide a more holistic view of its financial health and operational efficiency.