Adapthealth Corp (AHCO)
Cash conversion cycle
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 19.83 | 21.79 | 16.40 | 14.45 | 15.27 | 13.10 | 15.63 | 19.00 | 18.26 | 18.96 | 16.32 | 16.69 | 22.58 | 19.96 | 19.65 | 23.32 | 23.88 | 15.38 | 10.70 | 10.56 |
| Days of sales outstanding (DSO) | days | 50.86 | 49.25 | 55.06 | 54.01 | 54.35 | 50.61 | 49.83 | 48.51 | 50.72 | 65.54 | 68.39 | 74.87 | 83.68 | 79.52 | 88.41 | 104.25 | 101.31 | 74.11 | 73.49 | 89.01 |
| Number of days of payables | days | 40.35 | 43.50 | 37.01 | 30.14 | 28.41 | 23.09 | 30.83 | 42.18 | 31.81 | 36.03 | 31.54 | 35.65 | 45.50 | 42.25 | 62.81 | 70.80 | 77.60 | 47.93 | 45.33 | 61.80 |
| Cash conversion cycle | days | 30.33 | 27.54 | 34.46 | 38.33 | 41.20 | 40.61 | 34.64 | 25.32 | 37.17 | 48.48 | 53.18 | 55.92 | 60.76 | 57.23 | 45.25 | 56.77 | 47.59 | 41.57 | 38.85 | 37.77 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 19.83 + 50.86 – 40.35
= 30.33
The cash conversion cycle of Adapthealth Corp has shown varying trends over the observed periods. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash receipts from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle fluctuated significantly. It started at 37.77 days in March 2020, increased to 60.76 days by December 2021, and then gradually decreased to 30.33 days by December 2024.
The company's cash conversion cycle peaked at 60.76 days in December 2021, indicating a longer period between spending on production and receiving cash from sales. A high and increasing cash conversion cycle may suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers.
However, in March 2023, the cash conversion cycle experienced a significant improvement, dropping to 25.32 days, which may indicate more efficient operations in converting resources into cash. This improvement was followed by fluctuations in subsequent periods, with the cycle remaining relatively stable around 30-40 days.
Overall, monitoring the cash conversion cycle is crucial for assessing a company's operational efficiency and financial health. Adapthealth Corp's management should focus on optimizing working capital management to minimize the cycle duration and enhance cash flow efficiency.
Peer comparison
Dec 31, 2024