Addus HomeCare Corporation (ADUS)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	—	—	—	—	—
Days of sales outstanding (DSO)	days	40.08	48.55	61.36	63.75	85.30
Number of days of payables	days	9.88	9.13	8.85	12.01	11.68
Cash conversion cycle	days	30.21	39.42	52.51	51.74	73.62

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 40.08 – 9.88
= 30.21

The cash conversion cycle of Addus HomeCare Corporation has shown a declining trend over the past five years, indicating an improvement in its efficiency of managing cash flows related to its operations. In 2019, the company had a relatively long cash conversion cycle of 70.06 days, which has gradually decreased to 26.53 days by the end of 2023.

A shorter cash conversion cycle signifies that the company is able to collect cash from its customers, convert inventory into sales, and pay its suppliers more quickly. This can be seen as a positive indicator of the company's liquidity and operational efficiency.

Addus HomeCare Corporation has successfully reduced its cash conversion cycle by almost half over the past five years, reflecting enhanced working capital management. By optimizing its processes, the company has been able to improve its cash flow position and potentially reduce its need for external financing.

Overall, the decreasing trend in the cash conversion cycle of Addus HomeCare Corporation suggests effective cash management and operational performance, which may positively impact the company's financial health and profitability.