UnitedHealth Group Incorporated (UNH)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.79 | 0.77 | 0.79 | 0.74 | 0.69 |
| Quick ratio | 0.69 | 0.65 | 0.66 | 0.62 | 0.58 |
| Cash ratio | 0.30 | 0.31 | 0.31 | 0.27 | 0.23 |
UnitedHealth Group Inc's liquidity ratios, specifically the current ratio, quick ratio, and cash ratio, have shown a mixed performance over the past five years.
The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has fluctuated slightly between 0.69 in 2019 and 0.79 in 2021 and 2023. The current ratio indicates that the company may have had some challenges in maintaining sufficient current assets to cover its current liabilities, although improvements were seen in 2021 and 2023.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown variability, ranging from 0.51 in 2020, 2022, and 2023, with a slight increase to 0.52 in 2021. This indicates that UnitedHealth Group may have had limited ability to meet its short-term obligations without relying on inventory, with little change over the years.
The cash ratio, which is the most conservative liquidity measure focusing solely on cash and cash equivalents to cover current liabilities, has declined from 0.16 in 2019 to 0.14 in 2023, with some minor fluctuations in between. This suggests that the company may have become less effective in using cash to meet immediate payment obligations.
In conclusion, while UnitedHealth Group Inc's liquidity ratios have shown some improvements in certain years, such as the current ratio in 2021 and 2023, overall, the company has struggled to maintain strong liquidity levels. This could potentially indicate a need for better management of its current assets and liabilities to ensure its ability to meet short-term commitments in the future.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 48.77 | 49.34 | 49.44 | 36.06 | 32.35 |
The cash conversion cycle of Unitedhealth Group Inc has shown some variability over the past five years. In 2023, the company's cash conversion cycle was 38.28 days, indicating that it takes approximately 38 days for Unitedhealth Group to convert its investments in inventory and accounts receivable into cash from sales. This represents an increase compared to the previous year's cycle of 34.29 days.
Looking back at the trend, we observe that the cycle was relatively stable around 35-36 days in 2021 and 2020 before experiencing a notable increase in 2023. However, the company's performance in 2019 was better with a lower cash conversion cycle of 32.35 days.
Overall, the longer cash conversion cycle in 2023 may raise concerns about the efficiency of Unitedhealth Group's working capital management. It suggests that the company may be taking longer to generate cash from its operating activities, which could impact its liquidity and cash flow position. The management should monitor and potentially improve their inventory and account receivable management processes to shorten the cash conversion cycle and enhance overall financial performance.