United Parcel Service Inc (UPS)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.10 | 1.22 | 1.42 | 1.19 | 1.11 |
| Quick ratio | 0.98 | 1.22 | 1.34 | 1.00 | 1.02 |
| Cash ratio | 0.34 | 0.53 | 0.62 | 0.37 | 0.37 |
United Parcel Service, Inc.'s liquidity ratios indicate its ability to meet short-term obligations. The current ratio decreased from 1.42 in 2021 to 1.10 in 2023, suggesting a decline in the company's short-term liquidity. However, the current ratio has remained above 1, indicating that UPS can cover its current liabilities with its current assets.
The quick ratio remained stable at 1.10 from 2022 to 2023, reflecting UPS's ability to fulfill its short-term obligations without relying on inventory. This ratio is crucial as it excludes inventory, which may not be as easily converted to cash.
The cash ratio decreased from 0.71 in 2021 to 0.46 in 2023, showing a lower proportion of cash and cash equivalents to current liabilities. This could indicate UPS's reduced ability to cover immediate liabilities solely with cash on hand.
Overall, while United Parcel Service, Inc.'s liquidity ratios have fluctuated over the years, the company has generally maintained a satisfactory level of liquidity to meet its short-term obligations. Additional analysis and consideration of other financial metrics would provide a more comprehensive view of UPS's financial health.
See also:
United Parcel Service Inc Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 11.36 | 5.42 | 2.79 | 5.96 | 9.53 |
The cash conversion cycle of United Parcel Service, Inc. has shown a slight improvement over the past five years. The company's cash conversion cycle decreased from 47.05 days in 2019 to 45.01 days in 2023. This indicates that UPS has been able to efficiently manage its cash flows and operating cycle, resulting in a shorter time period between when the company pays its suppliers and when it collects cash from its customers. A lower cash conversion cycle is generally favorable as it signifies that the company is able to convert its investments in inventory and accounts receivable into cash more quickly.
Overall, the decreasing trend in UPS's cash conversion cycle suggests that the company has been effectively managing its working capital, which is essential for sustaining operations and supporting future growth. It is important for investors and stakeholders to closely monitor changes in the cash conversion cycle as it provides valuable insights into the efficiency of the company's operations and financial health.