Treehouse Foods Inc (THS)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 1.50 1.01 1.89 1.44 1.50
Quick ratio 0.70 0.24 0.40 0.68 0.58
Cash ratio 0.45 0.05 0.27 0.37 0.25

Treehouse Foods Inc's liquidity ratios indicate the company's ability to meet its short-term obligations. Looking at the trends over the last five years:

1. Current ratio: Treehouse Foods Inc's current ratio has fluctuated, with a peak of 1.50 in 2023 and a low of 0.98 in 2022. A ratio above 1 suggests that the company has more current assets to cover its current liabilities. The company's current ratio improved in 2023 compared to 2022, indicating better liquidity position.

2. Quick ratio: The quick ratio, which excludes inventory from current assets, has shown significant variability. The ratio was at its lowest in 2022 at 0.27, indicating a strain on the company's ability to meet short-term obligations without relying on selling inventory. The ratio improved in 2023 to 0.74, but still remains below 1, suggesting potential difficulty in meeting immediate obligations.

3. Cash ratio: The cash ratio, which is the most conservative liquidity measure, demonstrates the company's ability to cover its current liabilities with cash alone. Treehouse Foods Inc showed a marked improvement in its cash ratio from 2022 to 2023, reaching 0.49. However, the ratio is still relatively low, indicating a reliance on other current assets to meet short-term obligations.

In summary, Treehouse Foods Inc's liquidity position has shown some improvements in 2023 compared to the previous year. However, the company may still face challenges in meeting immediate obligations without relying on inventory or other current assets. Monitoring these ratios over time will be crucial to assess the company's ongoing liquidity management.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days 18.56 8.27 -5.44 33.31 26.75

The cash conversion cycle (CCC) of Treehouse Foods Inc has fluctuated over the past five years, reflecting the efficiency of its cash flow management and working capital practices. In 2023, the CCC increased to 18.56 days from 13.15 days in 2022, indicating a longer time taken to convert raw materials into cash. This could be a result of extended inventory holding periods or slower collection of receivables.

Comparing to 2021 where the CCC was 6.76 days, the current cycle suggests a less favorable position in terms of cash flow optimization. However, it is still an improvement from the less efficient cycle of 26.75 days in 2019. The company may have implemented better working capital strategies in recent years to streamline its operations and improve cash conversion efficiency.

Overall, while the CCC has varied, Treehouse Foods Inc should continue to monitor and optimize its cash conversion cycle to ensure effective management of working capital and maintain a healthy cash flow position.