MGP Ingredients Inc (MGPI)

Based on the provided data for MGP Ingredients Inc, let's analyze the liquidity ratios over the five-year period.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets. MGP Ingredients Inc's current ratio has been consistently strong, ranging from 4.13 to 5.91 over the period. This indicates that the company has a comfortable cushion of current assets to meet its short-term obligations.

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. MGP Ingredients Inc's quick ratio has varied over the years, reaching a low of 0.16 in 2023 and a high of 0.45 in 2022. A quick ratio lower than 1 may raise concerns about the company's ability to meet its short-term obligations without relying on inventory liquidation.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with its cash and cash equivalents. MGP Ingredients Inc's cash ratio has also fluctuated, ranging from 0.16 to 0.45. A higher cash ratio indicates a stronger ability to cover short-term liabilities with cash on hand.

In summary, MGP Ingredients Inc has maintained a robust current ratio over the five-year period, providing a comfortable margin to meet its short-term obligations. However, the quick ratio and cash ratio have shown some volatility, indicating fluctuations in the company's ability to cover immediate liabilities without relying on inventory or other current assets. It would be essential for stakeholders to monitor these ratios closely to ensure continued liquidity and financial health.

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Additional liquidity measure

The cash conversion cycle of MGP Ingredients Inc has varied over the past five years. In 2020, the company had a cash conversion cycle of 173.46 days, which increased to 209.86 days by the end of 2021. However, in 2022, there was a slight improvement as the cycle decreased to 199.88 days.

By the end of 2023, the cash conversion cycle increased significantly to 238.06 days, pointing to a possible inefficiency in the company's management of its working capital. The cycle further extended to 319.20 days by the end of 2024, indicating that MGP Ingredients Inc may be facing challenges in converting its investments in inventory and receivables into cash effectively.

Overall, the upward trend in the cash conversion cycle over the years suggests that MGP Ingredients Inc may need to focus on improving its inventory management and collection processes to enhance its liquidity and operational efficiency.