Encompass Health Corp (EHC)

Short-term

Turnover ratios

Encompass Health Corp's inventory turnover has exhibited an increasing trend over the years, indicating that the company is efficiently managing its inventory. The ratio has significantly improved from 3.07 in 2020 to 53.20 in 2023, showcasing a substantial enhancement in inventory management efficiency. However, the absence of data for 2024 makes it challenging to assess the current status.

The receivables turnover ratio for Encompass Health Corp is not available for any of the years up to 2024. This lack of data prevents us from evaluating how effectively the company collects its receivables from customers within a given period.

Similarly, the payables turnover ratio data is unavailable for Encompass Health Corp for all the years up to 2024. Without this information, it is difficult to gauge the company's payment practices with its suppliers.

On the other hand, the working capital turnover ratio has shown fluctuations over the years, with a peak of 117.06 in 2024. This ratio indicates how efficiently the company generates revenue from its working capital. The substantial rise in 2024 suggests that Encompass Health Corp has improved its ability to generate sales relative to its working capital investment, bringing efficiency gains.

In conclusion, while Encompass Health Corp demonstrates efficiency in managing inventory and working capital, the absence of data for receivables and payables turnovers limits a comprehensive analysis of the company's overall activity ratios.

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Average number of days

Encompass Health Corp's activity ratios provide insights into the efficiency of the company's operations in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The DOH ratio shows the number of days a company holds inventory before selling it.
- Encompass Health Corp's DOH has decreased significantly over the years, from 119.06 days in 2020 to 6.86 days in 2023. This indicates a more efficient inventory management process, with the company holding less inventory on hand.
- The sharp decline in DOH suggests that the company might be optimizing its inventory levels to reduce carrying costs and improve cash flow.

2. Days of Sales Outstanding (DSO):
- DSO measures how quickly a company collects payments from its customers.
- The data provided shows "— days" for DSO across all years, indicating that specific information on DSO is not available for analysis.
- Without DSO data, it is challenging to assess Encompass Health Corp's efficiency in collecting payments from customers and managing its accounts receivables.

3. Number of Days of Payables:
- This ratio reflects the number of days a company takes to pay its suppliers.
- Similar to DSO, the data for the Number of Days of Payables is not available ("— days"). Without this information, it is difficult to evaluate how efficiently Encompass Health Corp manages its payables and cash flow by delaying payments to suppliers.

In conclusion, the decreasing trend in Encompass Health Corp's Days of Inventory on Hand suggests improved efficiency in inventory management. However, the lack of data for Days of Sales Outstanding and Number of Days of Payables limits a comprehensive assessment of the company's overall activity ratios and working capital management.

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Long-term

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. In the case of Encompass Health Corp, we see a slight decline in the fixed asset turnover ratio from 1.89 in 2020 to 1.80 in 2021, and a more significant decrease to 1.38 in 2022. The absence of data for 2023 and 2024 may indicate a lack of fixed asset turnover information for those years.

This declining trend in fixed asset turnover suggests that Encompass Health Corp may be becoming less efficient in generating revenue from its fixed assets over the years covered in the data.

On the other hand, the total asset turnover ratio represents how effectively a company uses all its assets to generate sales. In the case of Encompass Health Corp, we observe an increasing trend in total asset turnover from 0.72 in 2020 to 0.82 in 2024. This improvement indicates that the company is generating more revenue relative to its total assets, which could be a positive sign of operating efficiency and effective asset utilization.

Overall, while the fixed asset turnover ratio for Encompass Health Corp shows a declining trend, the total asset turnover ratio displays an improving trend over the period analyzed. Further analysis and consideration of other factors would be necessary to fully assess the implications of these trends on the company's long-term operational performance and efficiency.