Union Pacific Corporation (UNP)

Based on the provided data, we can observe the liquidity ratios of Union Pacific Corp. over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a fluctuating trend. It was 0.81 in 2023, an improvement from the prior year, indicating that the company had $0.81 in current assets for every dollar of current liabilities. However, it is important to note that the ratio has been below 1.0 for the past three years, suggesting a potential liquidity concern.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Union Pacific Corp.'s quick ratio has followed a similar pattern to the current ratio, with a value of 0.67 in 2023. This indicates that the company may have difficulty meeting its short-term obligations without relying on inventory sales.

The cash ratio, which is the most conservative liquidity metric as it only considers cash and cash equivalents, has also exhibited variability over the years. In 2023, the cash ratio stood at 0.26, illustrating that Union Pacific Corp. had $0.26 in cash for every dollar of current liabilities, reflecting a relatively lower level of liquidity compared to the prior year.

Overall, the liquidity ratios of Union Pacific Corp. indicate that the company may be facing challenges in meeting its short-term financial obligations, particularly in terms of having sufficient liquid assets to cover liabilities. Investors and creditors may need to closely monitor these ratios to assess the company's liquidity position and the potential risks associated with its short-term financial stability.

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See also:

Union Pacific Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Union Pacific Corp. has shown a fluctuating trend over the past five years. In 2023, the cash conversion cycle increased to 31.37 days from 27.75 days in 2022. This indicates that the company took longer to convert its invested resources into cash during 2023.

Comparing to previous years, the cash conversion cycle was relatively stable around 28-29 days in 2021 and 2020. There was a slight improvement in 2019 when the cycle was 26.82 days, suggesting a more efficient management of working capital.

Overall, the upward trend in the cash conversion cycle from 2019 to 2023 may indicate potential challenges in managing the company's liquidity and working capital efficiency. Management should focus on optimizing inventory management, accounts receivable collection, and accounts payable payment processes to shorten the cash conversion cycle and improve cash flow performance.