Ingevity Corp (NGVT)

Ingevity Corp's liquidity ratios have exhibited a gradual decline over the years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, decreased from 2.81 in 2020 to 1.87 in 2024. This indicates a reduction in the company's ability to meet its short-term liabilities using its current assets.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, decreased significantly from 1.83 in 2020 to 0.26 in 2024. This suggests a substantial decrease in the company's ability to cover its short-term obligations without relying on inventory.

The cash ratio, which reflects the company's ability to pay off its current liabilities using only its cash and cash equivalents, also declined from 1.15 in 2020 to 0.26 in 2024. This indicates a decreasing trend in the company's ability to settle its short-term obligations solely with its readily available cash resources.

Overall, the declining trend in these liquidity ratios for Ingevity Corp suggests a potentially deteriorating liquidity position and raises concerns regarding the company's ability to meet its short-term financial obligations in the coming years. This trend may warrant further analysis and monitoring to assess the company's liquidity management strategies and potential risks.

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Additional liquidity measure

The cash conversion cycle of Ingevity Corp has shown a decreasing trend over the past five years, reflecting increased efficiency in managing its cash flow. In 2020, the company's cash conversion cycle was 79.87 days, indicating that it took nearly 80 days to convert its investments in inventory and receivables into cash.

However, the company made significant improvements in this area in the following years. By the end of 2024, Ingevity's cash conversion cycle had reduced to 28.92 days, indicating a substantial improvement in its working capital management.

The decreasing trend in the cash conversion cycle suggests that Ingevity was able to optimize its operations, streamline its inventory management, and collect receivables more efficiently. This improvement in the cash conversion cycle may have positive implications for the company's liquidity position and overall financial performance, as it signifies a more effective use of its working capital resources.

Overall, the decreasing trend in Ingevity Corp's cash conversion cycle over the five-year period demonstrates the company's efforts to enhance its cash flow efficiency and optimize its working capital management practices.