Universal Health Services Inc (UHS)

Universal Health Services Inc's liquidity ratios show some fluctuations over the years. The current ratio, which measures the company's ability to pay its short-term obligations with its current assets, improved from 1.32 in 2020 to 1.40 in 2023 before slightly decreasing to 1.27 in 2024. This indicates that the company has generally been able to meet its short-term obligations over the past few years.

In contrast, the quick ratio, or acid-test ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, remained consistently low at around 0.06 from 2021 to 2024. This suggests that Universal Health Services Inc may have difficulty meeting its immediate liabilities using only its most liquid assets.

Similarly, the cash ratio, which specifically measures the firm's ability to cover its current liabilities with cash and cash equivalents, also remained constant at 0.06 from 2021 to 2024. This implies that the company may have limited cash reserves available to address its short-term obligations.

Overall, while the company's current ratio indicates a relatively stable short-term liquidity position, the low quick ratio and cash ratio suggest that Universal Health Services Inc may rely heavily on assets other than cash to meet its immediate obligations, which could pose liquidity challenges in certain circumstances.

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Additional liquidity measure

Universal Health Services Inc's cash conversion cycle has shown fluctuations over the past five years. As of December 31, 2020, the company had a cash conversion cycle of 53.96 days, which decreased slightly to 52.90 days by December 31, 2021. However, by December 31, 2022, the cycle increased to 54.10 days before experiencing a significant drop to 9.17 days by December 31, 2023. This sharp decline suggests a more efficient management of cash flow, potentially due to improvements in inventory management or accounts receivable collection. Finally, by December 31, 2024, the cash conversion cycle increased to 50.79 days, indicating a longer time taken to convert sales into cash. Overall, while there have been fluctuations, the company's cash conversion cycle trended downwards, indicating improved liquidity and operational efficiency over the analyzed period.