Universal Health Services Inc (UHS)

Universal Health Services, Inc. has demonstrated generally stable performance in terms of liquidity ratios over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has shown an increasing trend from 1.23 in 2019 to 1.40 in 2023, indicating improved liquidity and ability to meet short-term obligations.

Similarly, the quick ratio, also known as the acid-test ratio, has also exhibited a positive growth trajectory over the same period, from 1.12 in 2019 to 1.29 in 2023. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. The consistent improvement in the quick ratio suggests that Universal Health Services has a solid ability to cover its short-term liabilities with its most liquid assets.

On the other hand, the cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, has been more volatile. The ratio declined significantly in 2020 to 0.55, but has since decreased further to 0.18 in 2023. This may indicate a lower level of cash reserves relative to current liabilities in recent years, highlighting a potential area for attention to ensure sufficient cash on hand for meeting obligations.

In conclusion, Universal Health Services, Inc. has maintained a strong liquidity position overall, as evidenced by the increasing trend in the current and quick ratios. However, the decline in the cash ratio raises a point of consideration regarding the company's cash management practices and the need to ensure adequate liquidity in the form of cash and equivalents.

---

Additional liquidity measure

The cash conversion cycle of Universal Health Services, Inc. has shown some variability over the past five years. The cycle measures how long it takes for the company to convert its investments in inventory and other resources back into cash flow from sales.

In 2023, the cash conversion cycle increased to 57.20 days from 54.96 days in 2022, indicating a possible slowdown in the conversion of inventory and resources into cash flow. However, this increase was not significant compared to previous years.

The company experienced the lowest cash conversion cycle in 2019 at 50.07 days and a slightly higher cycle in 2021 at 50.43 days, suggesting improved efficiency in managing its cash flow and resources during those years.

Overall, the trend in the cash conversion cycle for Universal Health Services, Inc. shows some fluctuations, but the company has generally been effective in managing its working capital and converting investments into cash flow efficiently.