The Marzetti Company (MZTI)

The liquidity ratios of The Marzetti Company over the specified period demonstrate notable fluctuations and trends that provide insight into the company's short-term financial health.

Beginning with the current ratio, which measures the company's ability to cover its current liabilities with its current assets, there was an initial slight increase from 2.92 at September 30, 2020, to 3.03 at the end of 2020. Afterward, the ratio experienced a gradual decline, reaching a low of 1.98 by September 30, 2022. This downward trend indicates a waning capability to meet short-term obligations solely through current assets. However, from late 2022 onward, the current ratio shows a recovery, rising back above two, with values expanding to 2.61 by September 30, 2024, and reaching as high as 2.61 by September 2024, suggesting an improvement in liquidity position.

The quick ratio, which excludes inventory from current assets to assess more liquid assets against current liabilities, followed a somewhat similar pattern. It peaked early at 2.16 in December 2020, then declined to about 0.99 by March 2022, indicating reduced immediate liquidity. After reaching this low point, the quick ratio exhibited stabilization and gradual improvement, reaching 1.37 by December 2023, and further increasing to approximately 1.38 by June 2025. This trend suggests that although short-term liquidity had weakened in the first half of the reported period, the company's ability to meet short-term obligations with highly liquid assets has improved since early 2023.

The cash ratio, representing the most conservative liquidity measure based solely on cash and cash equivalents, showed a declining trend initially—from 1.33 in September 2020 to 0.34 by September 2022—indicating reduced immediate liquidity strength. Subsequently, the cash ratio increased significantly, reaching over 1.21 by December 2024 before slightly declining to approximately 0.87 by June 2025. This pattern reflects periods of liquidity tightening followed by notable improvements in cash holdings.

Overall, while the liquidity ratios initially experienced declines, suggesting a period of reduced short-term liquidity, recent data indicates an improving trend. The company's liquidity position appears stable with current and quick ratios maintained above 2 and 1, respectively, and the cash ratio showing periods of significant recovery. These trends imply that The Marzetti Company has managed to enhance its liquidity position over time, though some volatility persists, emphasizing the importance of ongoing liquidity management.

---

Additional liquidity measure

The analysis of The Marzetti Company's cash conversion cycle (CCC) from September 2020 through June 2025 reveals fluctuations in operational efficiency related to the management of receivables, inventories, and payables. Initially, the CCC was approximately 34.91 days as of September 2020, indicating a relatively moderate cycle duration in that period.

Throughout 2020 and into early 2021, the CCC showed a modest decreasing trend, reaching a low of approximately 28.25 days by June 2021. This suggests improved efficiency in converting investments in inventory and receivables into cash, possibly due to enhanced inventory management, faster collections, or extended payables.

However, from September 2021 onwards, the CCC experienced an upward trend, peaking at around 37.96 days in September 2022. This increase may reflect longer inventory holding periods, slower receivable collections, or shorter payable periods, leading to a lengthening of the cash cycle and indicating decreased operational efficiency.

In late 2022 and into 2023, the CCC saw some reduction, notably dropping to approximately 28.37 days at the end of 2022, suggesting a temporary improvement in working capital management. But this was followed by fluctuations, with the cycle increasing again to roughly 37.95 days in September 2023, reflecting renewed cycles of inefficiency.

In the most recent periods analyzed, the CCC has remained variable: it increased again to about 41.11 days in September 2024 before decreasing somewhat to approximately 34.77 days in December 2024 and increasing slightly to 38.45 days in March 2025. As of June 2025, the cycle is about 31.21 days, indicating some reversion towards shorter cycles but with continued fluctuations.

Overall, the company's cash conversion cycle has exhibited cyclical variations over the analyzed period. The periods of longer cycles suggest periods of increased working capital investment or slower cash inflows, while shorter cycles point towards improved operational efficiency. These fluctuations may reflect strategic adjustments, seasonal effects, or shifts in credit and inventory policies. The company's ability to manage these changes effectively is crucial for maintaining liquidity and optimizing working capital utilization.