Universal Display (OLED)

The liquidity ratios of Universal Display indicate the company's ability to meet its short-term obligations.

- The current ratio, which compares current assets to current liabilities, decreased from 5.61 in 2020 to 4.93 in 2021, but then improved to 6.63 in 2022 and further to 7.72 in 2023 before slightly decreasing to 7.18 in 2024. This implies that the company has ample current assets to cover its current liabilities, with a notable increase over the years.

- The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also showed fluctuations. It decreased from 4.43 in 2020 to 3.53 in 2021, then increased to 4.26 in 2022 and 4.33 in 2023, before slightly dropping to 3.93 in 2024. The improving trend indicates the company's ability to meet short-term obligations without relying on inventory.

- The cash ratio, specifying the proportion of cash and cash equivalents to current liabilities, followed a similar pattern. It mirrored the changes in the quick ratio, showing that Universal Display held ample cash reserves in relation to its short-term debts.

Overall, the liquidity ratios of Universal Display have exhibited a generally positive trend, with improvements in the company's ability to cover short-term obligations using its current assets and cash reserves. This signifies a strong financial position and indicates a reduced risk of liquidity issues in the near term.

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Additional liquidity measure

The cash conversion cycle for Universal Display has shown a fluctuating trend over the past five years. Starting at 391.10 days in December 31, 2020, the cycle increased to 425.85 days by December 31, 2021. Subsequently, there was a significant jump to 522.89 days by December 31, 2022, indicating potential challenges in managing cash flows, inventory, and receivables.

However, there was a slight improvement by December 31, 2023, when the cash conversion cycle decreased to 473.98 days. This improvement suggests better efficiency in converting inventory and receivables into cash during that period. By December 31, 2024, the cash conversion cycle further decreased to 449.76 days, indicating more efficient management of working capital.

Overall, Universal Display displays variability in its cash conversion cycle, indicating areas where the company may need to focus on optimizing operational efficiency and working capital management to reduce the cycle duration and enhance cash flow effectiveness.