Addus HomeCare Corporation (ADUS)

Short-term

Turnover ratios

Based on the provided activity ratios for Addus HomeCare Corporation, we can analyze the efficiency of the company in managing its inventory, receivables, payables, and working capital over the past five years.

1. Receivables Turnover:
The receivables turnover ratio measures how effectively the company is collecting payments from its customers. Addus HomeCare Corporation has shown a consistent improvement in this ratio over the years, indicating a more efficient collection process.

2. Payables Turnover:
The payables turnover ratio reflects how quickly a company pays its suppliers. Addus HomeCare Corporation has maintained a relatively stable payables turnover ratio over the years, indicating consistent payment terms with suppliers.

3. Working Capital Turnover:
The working capital turnover ratio measures how efficiently the company utilizes its working capital to generate revenue. Addus HomeCare Corporation has shown a significant improvement in this ratio, suggesting that the company has been more effective in generating revenue from its working capital investments.

4. Inventory Turnover:
Unfortunately, the data provided does not include the inventory turnover ratio, which could provide valuable insights into how efficiently the company manages its inventory levels.

Overall, the trend in these activity ratios for Addus HomeCare Corporation suggests improvements in efficiency and effectiveness in managing key aspects of its operations, such as receivables, payables, and working capital.

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Average number of days

Based on the activity ratios provided for Addus HomeCare Corporation over the past five years, the days of sales outstanding (DSO) have shown a gradual improvement. The DSO decreased from 85.33 days in 2019 to 39.82 days in 2023, indicating that the company has been collecting its accounts receivable more efficiently over time.

On the other hand, the days of inventory on hand (DOH) data is missing, making it challenging to assess the efficiency of the company's inventory management.

In terms of the number of days of payables, Addus HomeCare Corporation has been relatively stable, with a slight increase in the number of days of payables from 15.27 days in 2019 to 13.30 days in 2023. This suggests that the company is taking slightly longer to pay its suppliers, which could potentially improve its cash flow position.

Overall, the improvements in days of sales outstanding and the stable trend in the number of days of payables indicate that Addus HomeCare Corporation has been effectively managing its working capital and optimizing its cash conversion cycle in recent years.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. Over the past five years, Addus HomeCare Corporation's fixed asset turnover has demonstrated a fluctuating trend, ranging from 38.72 to 53.37, with a peak in 2019. This indicates that the company has been effectively utilizing its fixed assets to generate revenue, albeit with some variability.

On the other hand, the total asset turnover ratio reflects the company's overall efficiency in generating sales from all of its assets. Addus HomeCare Corporation's total asset turnover has shown a generally increasing trend, rising from 0.86 in 2020 to 1.03 in 2023. This suggests that the company has improved its efficiency in utilizing its total assets to generate sales over the years.

Overall, while there have been fluctuations in the fixed asset turnover ratio, Addus HomeCare Corporation has shown an improvement in its total asset turnover ratio, indicating increased efficiency in generating revenue from its assets. Investors and stakeholders may view these ratios positively as indicators of the company's effective asset utilization and potential for revenue growth.