Universal Corporation (UVV)

Universal Corporation's liquidity ratios indicate fluctuations in its ability to meet short-term obligations and manage cash effectively over the past five years.

The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has shown a downward trend from 5.31 in 2021 to 2.87 in 2025. While the ratio remains above 1, indicating a healthy liquidity position, the decreasing trend warrants attention and may indicate potential challenges in meeting short-term obligations.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown variability, dropping from 2.22 in 2021 to 0.82 in 2024 before rising to 1.19 in 2025. This suggests that Universal Corporation may have faced difficulty in quickly converting its most liquid assets into cash in 2024, although the ratio has improved in the most recent year.

Lastly, the cash ratio, which focuses solely on the company's ability to cover current liabilities with cash and cash equivalents, shows a significant decline from 0.96 in 2021 to 0.35 in 2025. This downward trend may indicate that Universal Corporation's cash position has weakened over time, potentially affecting its ability to handle unforeseen expenses or opportunities.

Overall, while Universal Corporation's liquidity ratios have shown some fluctuations, the company has generally maintained a sound liquidity position. However, management should closely monitor these ratios to ensure the company can meet its short-term financial obligations and adapt to changing market conditions effectively.

---

Additional liquidity measure

The cash conversion cycle for Universal Corporation has shown some fluctuations over the past five years. In March 2021, the cash conversion cycle was 215.32 days, indicating that on average it took the company about 215 days to convert its investments in inventory and other resources into cash flows from sales.

By March 2022, the cash conversion cycle increased to 250.35 days, suggesting a slower conversion of resources into cash compared to the previous year. However, the cycle improved in March 2023 to 222.67 days, reflecting a more efficient management of working capital.

In March 2024, there was a significant increase in the cash conversion cycle to 283.75 days, which may indicate challenges in effectively managing inventory, accounts receivables, and payables. Nevertheless, in March 2025, the cycle decreased to 240.52 days, indicating a better performance in converting resources into cash flows compared to the previous year.

Overall, the trend in the cash conversion cycle for Universal Corporation shows fluctuations, with some years indicating better efficiency in managing working capital than others. It is important for the company to closely monitor and manage its cash conversion cycle to ensure optimal cash flow and working capital management.