The Marzetti Company (MZTI)

The liquidity position of The Marzetti Company over the analyzed period reveals several noteworthy trends.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, experienced a decline from 2.43 on June 30, 2021, to a low of 2.12 on June 30, 2022. Subsequently, it demonstrated a modest recovery, reaching 2.22 in 2023, then increasing further to 2.41 in 2024, before slightly tapering to 2.38 in 2025. Throughout this timeframe, the current ratio remained above 2.0, indicating generally sound short-term liquidity and a consistent ability to cover current liabilities with current assets.

The quick ratio, which assesses liquidity excluding inventories, followed a similar but more pronounced trend. It decreased from 1.64 in 2021 to 1.18 in 2022, suggesting a reduced capacity to cover short-term liabilities without relying on inventory. The ratio modestly increased afterward, reaching 1.21 in 2023, then improving to 1.41 in 2024, and slightly declining to 1.38 in 2025. Overall, the quick ratio remained above 1.0, indicating that the company maintained sufficient liquid assets to meet immediate obligations, although the decline in 2022 points to a period of decreased liquidity confidence.

The cash ratio, reflecting the most conservative measure of liquidity by considering only cash and cash equivalents, exhibited a significant decline from 1.08 in 2021 to 0.36 in 2022. This sharp reduction indicates a substantial decrease in cash holdings relative to short-term liabilities. After 2022, the cash ratio showed signs of recovery, climbing to 0.52 in 2023, then further to 0.89 in 2024, and stabilizing at 0.87 in 2025. Despite the recovery, the cash ratio remained below 1.0, highlighting that the company’s immediate liquidity, as measured solely by cash, has remained relatively modest in recent years.

In summary, The Marzetti Company's liquidity ratios suggest a pattern of initial strengths with fluctuations over the period. The current ratio remained comfortably above 2.0, indicating an adequate buffer for short-term liabilities. The quick ratio, while declining in 2022, recovered to a healthy level above 1.0 by 2024, reflecting sustained ability to satisfy short-term obligations excluding inventory. The cash ratio declined sharply in 2022 but improved steadily thereafter, though it did not return to the levels seen in 2021, implying a cautious approach to cash holdings or changes in cash management strategies. Overall, the company maintained a generally stable liquidity profile, with some periods of decreased immediate liquidity, particularly in relation to cash holdings.

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Additional liquidity measure

The Marzetti Company’s cash conversion cycle (CCC) over the analyzed period demonstrates notable fluctuations and a general trend toward stability in recent years. On June 30, 2021, the CCC was approximately 28.25 days, indicating that the company took around this duration to convert its investments in inventory and receivables into cash flows from sales, less the period it deferred its payables.

By June 30, 2022, the CCC increased to approximately 37.72 days, reflecting a lengthening in the cycle by roughly 9.47 days. This expansion suggests that either the company experienced delays in receivables collection, increased inventory holding periods, or a combination thereof, which extended the time needed to convert assets into cash.

In the subsequent year, the cycle showed a modest decrease to approximately 34.86 days by June 30, 2023. This adjustment indicates some improvement in managing the conversion processes, although the CCC remained elevated relative to the 2021 level.

Moving into the fiscal year ending June 30, 2024, the CCC further declined to approximately 32.44 days. This decline indicates ongoing efforts to optimize cash flow management, leading to a shorter cycle duration and improved operational efficiency.

Most recently, by June 30, 2025, the CCC was approximately 31.21 days, continuing the downward trend. This value suggests a slight but steady improvement, bringing the company closer to its 2021 cycle timing, indicating enhanced management of receivables, inventory, or payables.

Overall, the trend in The Marzetti Company’s cash conversion cycle from 2021 to 2025 reveals periods of expansion and contraction, with recent years showing a consistent reduction toward a more efficient operating cycle. The gradual decrease in CCC suggests ongoing improvements in working capital management that could positively influence liquidity and operational efficiency.