UnitedHealth Group Incorporated (UNH)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.83 | 0.79 | 0.77 | 0.79 | 0.74 |
| Quick ratio | 0.28 | 0.30 | 0.31 | 0.31 | 0.27 |
| Cash ratio | 0.28 | 0.30 | 0.31 | 0.31 | 0.27 |
UnitedHealth Group Incorporated's liquidity ratios have shown some improvement over the years, but they still indicate potential concerns.
1. Current Ratio: The current ratio has increased from 0.74 in 2020 to 0.83 in 2024. This ratio measures the company's ability to cover its short-term obligations with its current assets. A current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations. While the current ratio has improved, it is still below 1 for all years, indicating that UnitedHealth Group may face challenges in meeting its short-term liabilities with its current assets alone.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, has remained relatively stable over the years, ranging from 0.27 in 2020 to 0.28 in 2024. This ratio provides a more stringent measure of liquidity as it excludes inventory from current assets. A quick ratio below 1 indicates that the company may struggle to meet its short-term obligations without relying on selling inventory. The stability of the quick ratio shows that UnitedHealth Group's ability to cover its immediate liabilities with its most liquid assets has not significantly improved.
3. Cash Ratio: The cash ratio represents the proportion of a company's current assets held in cash or cash equivalents. UnitedHealth Group's cash ratio has also shown consistency, ranging from 0.27 in 2020 to 0.28 in 2024. This ratio provides insight into the company's ability to cover its short-term liabilities using only its cash and cash equivalents. While the cash ratio is slightly higher than the current and quick ratios, it is still below 1 for all years, indicating that UnitedHealth Group may have limited cash reserves to meet its short-term obligations.
In conclusion, UnitedHealth Group's liquidity ratios suggest that the company may face challenges in meeting its short-term financial obligations with its current assets and cash equivalents alone. While there has been some improvement in these ratios over the years, the ratios remain below the ideal thresholds, highlighting the need for the company to closely monitor and manage its liquidity position.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
The cash conversion cycle of UnitedHealth Group Incorporated has remained consistently efficient over the years, with the cycle consistently at 0.00 days from December 31, 2020, to December 31, 2024. This indicates that the company is able to efficiently convert its investments in raw materials and production back into cash, showcasing a strong management of cash flows and working capital. A low or zero cash conversion cycle is favorable as it signifies that UnitedHealth is able to quickly convert its resources into cash, maintaining liquidity and financial health in its operations.