Union Pacific Corporation (UNP)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.77 | 0.81 | 0.72 | 0.62 | 1.01 |
| Quick ratio | 0.56 | 0.62 | 0.53 | 0.47 | 0.81 |
| Cash ratio | 0.20 | 0.21 | 0.18 | 0.18 | 0.45 |
The liquidity ratios of Union Pacific Corporation have shown variations over the years based on the provided data.
1. Current Ratio: The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, decreased from 1.01 in December 2020 to 0.77 in December 2024. This downward trend indicates that the company may be facing challenges in maintaining sufficient current assets to cover its short-term liabilities.
2. Quick Ratio: The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also declined from 0.81 in December 2020 to 0.56 in December 2024. This implies that the company's ability to meet its short-term obligations using its most liquid assets has weakened over the years.
3. Cash Ratio: The cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, remained relatively stable between 0.18 and 0.21 from December 2021 to December 2023, before dropping slightly to 0.20 by December 2024. While the cash ratio provides insights into the company's immediate liquidity position, a higher ratio is generally preferred to ensure financial flexibility.
Overall, the decreasing trend in these liquidity ratios suggests that Union Pacific Corporation may need to closely monitor its liquidity position and take appropriate measures to improve its ability to meet short-term obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 25.29 | 28.58 | 27.07 | 24.57 | 29.37 |
The cash conversion cycle of Union Pacific Corporation has been fluctuating over the past five years. In December 2020, the cash conversion cycle was 29.37 days, indicating that it took the company about 29 days to convert its investments in inventory and other resources into cash flows from sales. By December 2021, the cycle had improved to 24.57 days, suggesting a more efficient management of working capital.
However, in the following years, the cash conversion cycle increased slightly, reaching 27.07 days in December 2022, 28.58 days in December 2023, and then falling back to 25.29 days by December 2024. These fluctuations may indicate changes in inventory management, payment terms with suppliers, or collection practices with customers.
Overall, Union Pacific Corporation's cash conversion cycle shows some variability over the period analyzed, highlighting the importance of closely monitoring working capital efficiency to ensure optimal cash flow management.