United Rentals Inc (URI)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.81 | 0.81 | 0.74 | 1.15 | 1.11 | 1.03 | 1.07 | 0.77 | 0.83 | 0.80 | 0.85 | 1.09 | 1.07 | 0.90 | 0.84 | 1.11 | 0.84 | 0.71 | 0.73 | 0.77 |
| Quick ratio | 0.71 | 0.70 | 0.62 | 0.94 | 0.86 | 0.89 | 0.90 | 0.66 | 0.70 | 0.70 | 0.68 | 0.83 | 0.80 | 0.78 | 0.70 | 0.96 | 0.72 | 0.63 | 0.63 | 0.69 |
| Cash ratio | 0.10 | 0.08 | 0.06 | 0.04 | 0.04 | 0.03 | 0.03 | 0.04 | 0.06 | 0.12 | 0.13 | 0.15 | 0.11 | 0.09 | 0.07 | 0.26 | 0.02 | 0.02 | 0.03 | 0.02 |
The liquidity ratios of United Rentals, Inc. indicate its ability to meet short-term obligations and manage liquidity. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has been relatively volatile, hovering around 0.8 over the past year, indicating that current assets may not fully cover current liabilities. The quick ratio, which provides a more stringent measure by excluding inventory from current assets, has exhibited a similar trend, also indicating potential liquidity concerns.
The cash ratio, which specifically assesses the company's ability to cover current liabilities with its cash and cash equivalents, has also shown volatility, falling to 0.09 in some quarters. This suggests that United Rentals may have limited cash reserves to cover immediate obligations.
Overall, the declining trend in these liquidity ratios over the past year raises concerns about United Rentals' short-term liquidity position. Management may need to closely monitor and actively manage cash flow to ensure the company can meet its short-term financial obligations.
See also:
United Rentals Inc Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 26.80 | 18.64 | 5.43 | 14.22 | 13.02 | 10.13 | 9.19 | 18.46 | 22.41 | 5.95 | 9.72 | 23.19 | 32.99 | 26.39 | 36.01 | 31.57 | 38.26 | 16.20 | 19.91 | 32.39 |
The cash conversion cycle (CCC) is a measure of the time it takes for a company to convert its investment in inventory and other resources into cash flows from sales. A shorter CCC indicates a more efficient use of working capital and a faster cash generation process.
Analyzing the data provided for United Rentals, Inc., it is observed that the CCC fluctuates significantly over the periods provided. For the quarter ending December 31, 2023, the CCC was 15.38 days, indicating it took the company approximately 15.38 days to convert its resource investments into cash from sales. This represents a substantial increase from the previous quarter and suggests a less efficient working capital management during this period.
In the quarter ending September 30, 2023, the CCC was 3.02 days, indicating a relatively efficient cash conversion process. However, the CCC turned negative in the previous quarter, June 30, 2023, and March 31, 2023, indicating that in these periods, the company had negative working capital cycles whereby it was able to convert its investments into cash before paying off its current liabilities.
The negative CCC can indicate a more favorable position from a working capital management perspective, as it suggests that the company is selling inventory and collecting receivables quicker than paying its suppliers. However, a consistently negative CCC may also indicate potential issues with inventory management or aggressive customer credit policies.
Looking at the trends over the periods provided, it appears that United Rentals, Inc. experienced fluctuating cash conversion cycles, which may be attributed to changes in sales, inventory management, and collection practices. Further analysis is necessary to understand the factors driving these fluctuations and their implications for the company's financial performance and working capital management.