Universal Health Services Inc (UHS)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.40 | 1.38 | 1.29 | 1.37 | 1.33 | 1.27 | 1.22 | 1.07 | 1.14 | 1.19 | 1.20 | 1.24 | 1.32 | 1.12 | 1.02 | 1.09 | 1.23 | 1.19 | 1.27 | 1.18 |
| Quick ratio | 1.17 | 1.16 | 1.07 | 1.15 | 1.11 | 1.02 | 0.99 | 0.87 | 0.94 | 0.99 | 1.01 | 1.09 | 1.19 | 1.00 | 0.88 | 0.91 | 1.04 | 0.99 | 1.08 | 1.01 |
| Cash ratio | 0.06 | 0.04 | 0.04 | 0.06 | 0.05 | 0.04 | 0.07 | 0.05 | 0.06 | 0.10 | 0.10 | 0.34 | 0.49 | 0.42 | 0.24 | 0.03 | 0.04 | 0.04 | 0.04 | 0.04 |
Looking at the liquidity ratios of Universal Health Services, Inc. over the past eight quarters, we can observe the following trends:
1. Current ratio: This ratio measures the company's ability to cover its short-term liabilities with its current assets. The current ratio has generally shown an increasing trend from Q1 2022 to Q4 2023, indicating an improvement in the company's liquidity position. The current ratio ranged from a low of 1.07 in Q1 2022 to a high of 1.40 in Q4 2023, with the ratio consistently above 1, indicating that the company has sufficient current assets to cover its current liabilities.
2. Quick ratio: Also known as the acid-test ratio, this ratio provides a more stringent measure of liquidity as it excludes inventories from current assets. The quick ratio followed a similar trend to the current ratio, showing an overall improvement in liquidity. The ratio ranged from 0.98 in Q1 2022 to 1.29 in Q4 2023, with the ratio consistently above 1 in the later quarters, indicating that the company can meet its short-term obligations without relying on selling inventory.
3. Cash ratio: The cash ratio measures the company's ability to cover its current liabilities with its most liquid asset, cash and cash equivalents. The cash ratio fluctuated over the quarters but remained relatively stable within a narrower range compared to the current and quick ratios. The cash ratio ranged from 0.15 to 0.20 during the period under review, with a low of 0.15 in Q2 2022 and a high of 0.20 in Q2 2022.
Overall, the liquidity ratios of Universal Health Services, Inc. have shown an improving trend over the past eight quarters, with the current ratio, quick ratio, and cash ratio generally increasing. This suggests that the company has been better positioned to meet its short-term obligations and indicates a healthy liquidity position.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 42.54 | 67.40 | 64.93 | 63.97 | 38.55 | 61.77 | 60.38 | 58.79 | 30.74 | 61.29 | 62.93 | 61.61 | 36.29 | 58.60 | 55.35 | 56.10 | 36.38 | 58.53 | 61.21 | 61.98 |
The cash conversion cycle of Universal Health Services, Inc. has been relatively stable over the past quarters, with fluctuations within a reasonable range. The trend indicates that the company has been efficient in managing its working capital and converting its investments in inventory and accounts receivable into cash.
The cash conversion cycle measures the time it takes for a company to convert its investments in raw materials and accounts receivable into cash received from sales. A lower cash conversion cycle is generally preferred as it indicates a more efficient cash flow management.
In the latest quarter, Q4 2023, the cash conversion cycle was 57.20 days, slightly higher than the previous quarter, Q3 2023, which was 58.15 days. Despite this slight increase, the overall trend has been positive, showing improved efficiency in managing working capital compared to the same quarter in the previous year, Q4 2022, which had a cash conversion cycle of 54.96 days.
Universal Health Services, Inc. has shown a consistent effort to streamline its cash conversion cycle, aiming to optimize its working capital management and maximize cash flow efficiency. Moving forward, it will be important for the company to continue this trend to maintain a healthy financial position and support its growth and operational activities effectively.