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.
Peer comparison
Dec 31, 2023