UGI Corporation (UGI)

The liquidity ratios of UGI Corp. demonstrate the company's ability to meet its short-term financial obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has fluctuated over the past five years. In 2023, the current ratio decreased to 0.90 from 1.56 in 2022, indicating a potential decrease in the company's ability to cover its current liabilities with its current assets.

Similarly, the quick ratio, which provides a more stringent assessment by excluding inventory from current assets, also experienced a decrease from 1.14 in 2022 to 0.66 in 2023. This may suggest a decline in the company's ability to meet its short-term liabilities using its most liquid assets.

Furthermore, the cash ratio, representing the proportion of cash and cash equivalents to cover current liabilities, exhibited a declining trend over the past five years, dropping to 0.24 in 2023 from 0.61 in 2022. This signifies a potential reduction in UGI Corp.'s ability to fulfill its short-term obligations solely with its cash and cash equivalents.

Overall, the decreasing trend in these liquidity ratios indicates a potential deterioration in UGI Corp.'s short-term financial flexibility and may warrant further investigation into the company's cash management and liquidity position.

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Additional liquidity measure

The cash conversion cycle for UGI Corp. has fluctuated over the past five years. In 2023, the cycle decreased to 29.24 days from 32.35 days in 2022. This indicates that UGI Corp. was able to convert its investments in inventory and receivables into cash more efficiently in 2023 compared to the previous year. However, the negative cash conversion cycle of -1.24 days in 2021 suggests that UGI Corp. was able to generate cash from its sales and services before paying its suppliers, which can be a favorable indicator of efficient working capital management. The positive cash conversion cycles in 2020 and 2019 indicate that the company took longer to convert its investments in inventory and receivables into cash during those periods. Overall, the trend in UGI Corp.'s cash conversion cycle suggests fluctuations in its efficiency in managing inventory, receivables, and payables over the years.