Universal Health Services Inc (UHS)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 8.47 | 8.85 | 9.14 | 9.38 | 7.86 |
| Days of sales outstanding (DSO) | days | 58.04 | 55.49 | 50.76 | 55.10 | 50.80 |
| Number of days of payables | days | 23.97 | 25.80 | 29.12 | 28.10 | 21.96 |
| Cash conversion cycle | days | 42.54 | 38.55 | 30.78 | 36.38 | 36.69 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 8.47 + 58.04 – 23.97
= 42.54
The cash conversion cycle of Universal Health Services, Inc. has shown some fluctuations over the past five years. The cycle increased from 50.07 days in 2019 to 54.60 days in 2020, before decreasing to 50.43 days in 2021. It then increased slightly to 54.96 days in 2022 and further to 57.20 days in 2023.
The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and receivables into cash inflows from sales. A longer cash conversion cycle indicates that the company is taking longer to realize cash from its operations, which may imply inefficiencies in managing inventory, collecting receivables, or managing payables.
In the case of Universal Health Services, Inc., the increasing trend in the cash conversion cycle over the past two years suggests a potential need for the company to focus on improving its inventory management, accounts receivable collection processes, or payment terms with suppliers to accelerate cash inflows. It would be beneficial for the company to analyze the reasons behind the longer cash conversion cycle and implement strategies to optimize working capital management to enhance its overall financial performance.
Peer comparison
Dec 31, 2023