Treehouse Foods Inc (THS)

Treehouse Foods Inc's liquidity ratios show a mixed performance over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated. It decreased from 1.44 in 2020 to 0.98 in 2022 but then improved to 1.50 in 2023 before settling at 1.36 in 2024. A current ratio above 1 indicates that the company can meet its short-term obligations.

The quick ratio, a more stringent liquidity measure that excludes inventory from current assets, also showed a declining trend. It dropped from 0.37 in 2020 to 0.08 in 2022, indicating potential liquidity challenges. However, it improved to 0.45 in 2023 and 0.39 in 2024, showing some recovery.

The cash ratio, which focuses solely on the company's cash and cash equivalents to cover its current liabilities, was consistent with the quick ratio. It declined from 0.37 in 2020 to 0.08 in 2022 but rebounded to 0.45 in 2023 and 0.39 in 2024.

Overall, Treehouse Foods Inc's liquidity ratios reflect variability and some instability in its ability to meet short-term obligations. The company may need to monitor its liquidity position closely and take steps to improve it in the future.

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Additional liquidity measure

Treehouse Foods Inc's cash conversion cycle has fluctuated over the past five years. In 2020, the company's cash conversion cycle was 61.59 days, indicating that it took approximately 61.59 days for Treehouse Foods Inc to convert its investments in inventory and accounts receivable into cash.

By the end of 2021, the cash conversion cycle had increased to 105.60 days, reflecting a slower conversion process and potential challenges in managing working capital effectively. However, by the end of 2022, the cash conversion cycle improved to 77.55 days, suggesting that the company may have implemented strategies to enhance its cash flow efficiency.

In 2023, Treehouse Foods Inc's cash conversion cycle decreased to 68.26 days, indicating a more efficient working capital management compared to the previous year. Although there was a slight increase to 70.16 days by the end of 2024, the company continued to maintain a relatively stable cash conversion cycle, reflecting its ability to effectively manage cash flow and working capital.

Overall, Treehouse Foods Inc's cash conversion cycle has shown variability, with fluctuations possibly influenced by changes in inventory management, sales policies, and collection practices. Continuous monitoring and optimization of the cash conversion cycle are crucial for the company to efficiently utilize its resources and sustain financial performance.