Adapthealth Corp (AHCO)

Short-term

Turnover ratios

Adapthealth Corp's Inventory Turnover ratio, which measures the number of times inventory is sold and replaced over a period, showed a consistent pattern of decline from approximately 34.58 in March 2020 to around 18.41 in December 2024. This suggests that the company's inventory turnover efficiency decreased over the years.

On the other hand, the Receivables Turnover ratio, indicating how many times receivables are collected during a period, fluctuated but generally improved from 4.10 in March 2020 to around 7.18 in December 2024. This trend indicates better management of accounts receivable collection efficiency by Adapthealth Corp.

The Payables Turnover ratio, reflecting how quickly the company pays its suppliers, varied over time, with peaks and troughs observed. It ranged from 4.70 in December 2020 to around 12.11 in March 2024, showing some volatility in the company's payables management.

Moreover, the Working Capital Turnover ratio, which measures how efficiently the company uses its working capital to generate sales, demonstrated a notable improvement from 165.37 in March 2020 to 17.09 in December 2024. This indicates that Adapthealth Corp became more efficient in utilizing its working capital to drive revenues during the period under consideration.

Overall, analyzing these activity ratios provides insights into the efficiency of Adapthealth Corp's inventory management, accounts receivable collection, supplier payment practices, and utilization of working capital in generating sales over the years.

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Average number of days

Based on the provided data, we can analyze the activity ratios of Adapthealth Corp as follows:

1. Days of Inventory on Hand (DOH):
- Adapthealth Corp's DOH has fluctuated over the years, ranging from a low of 10.56 days to a high of 23.88 days. The company managed to improve its inventory management efficiency towards the end of 2023 and into 2024, with DOH declining to around 15 days.
- A lower DOH indicates that the company is selling its inventory more quickly, which could potentially free up working capital and reduce carrying costs.

2. Days of Sales Outstanding (DSO):
- The DSO of Adapthealth Corp also showed variability, with values ranging from 48.51 days to 104.25 days. The trend indicates that the company has been collecting its accounts receivable more efficiently, with DSO significantly decreasing by the end of 2023 and into 2024.
- A lower DSO suggests that the company is collecting payments from customers faster, improving cash flows and potentially reducing the risk of bad debts.

3. Number of Days of Payables:
- Adapthealth Corp's payables days have been relatively stable, with a range of 23.09 days to 77.60 days. The company has been managing its payables efficiently, maintaining a balance between paying suppliers promptly and extending payment terms.
- A longer period of payables days can indicate that the company is effectively using trade credit to manage its working capital and cash flow.

In summary, Adapthealth Corp has shown improvements in its inventory management, accounts receivable collection, and payables management over the years. These activity ratios reflect the company's effectiveness in managing its operating cycle and working capital, which are crucial for maintaining financial health and sustainable growth.

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Long-term

Adapthealth Corp's Fixed Asset Turnover ratio has exhibited fluctuations over the past few years. It increased steadily from March 31, 2020, to June 30, 2021, peaking at 8.12, before gradually declining to 4.43 as of June 30, 2022. However, it has since shown a slight upward trend, reaching 6.80 by December 31, 2024. This ratio indicates the company's efficiency in generating sales revenue from its investment in fixed assets.

On the other hand, the Total Asset Turnover ratio has been relatively low, generally below 1.0, reflecting a lower level of efficiency in utilizing total assets to generate sales. The ratio saw a significant drop from March 31, 2020, to December 31, 2020, but has shown a gradual improvement since then, reaching 0.72 by December 31, 2024. This suggests that the company may have improved its utilization of total assets in generating revenue over the recent years.

In summary, Adapthealth Corp's Fixed Asset Turnover ratio has been more volatile, while the Total Asset Turnover ratio has shown a more consistent but relatively low efficiency in asset utilization for generating sales. Both ratios provide insights into the company's operational efficiency and asset management strategies over the analyzed period.