Encompass Health Corp (EHC)
Cash conversion cycle
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 5.42 | 4.88 | 4.36 | 3.82 | 5.02 | 7.71 | 6.79 | 7.47 | 8.99 | 7.88 | 7.71 | 8.14 | 7.15 | 7.01 | 7.02 | 7.21 | 8.55 | 7.47 | 7.98 |
| Days of sales outstanding (DSO) | days | 47.88 | 42.68 | 43.53 | 40.99 | 41.24 | 39.20 | 49.57 | 51.69 | 39.89 | 47.59 | 48.00 | 50.77 | 46.39 | 48.38 | 45.13 | 43.68 | 41.15 | 42.87 | 42.02 | 42.68 |
| Number of days of payables | days | 21.65 | 21.62 | 20.85 | 17.95 | 16.05 | 15.20 | 15.07 | 16.40 | 15.38 | 17.69 | 17.58 | 15.22 | 14.31 | 14.96 | 11.58 | 12.13 | 11.88 | 12.97 | 12.58 | 12.81 |
| Cash conversion cycle | days | 26.24 | 26.48 | 27.56 | 27.41 | 29.00 | 29.02 | 42.22 | 42.09 | 31.98 | 38.89 | 38.29 | 43.26 | 40.22 | 40.57 | 40.57 | 38.56 | 36.48 | 38.45 | 36.91 | 37.86 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 47.88 – 21.65
= 26.24
The cash conversion cycle of Encompass Health Corp has shown some fluctuation over the past eight quarters. It measures the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle generally indicates a more efficient use of resources and quicker cash generation.
In Q4 2023, the cash conversion cycle was 46.50 days, slightly lower compared to Q3 2023 (47.14 days) and Q2 2023 (48.19 days). This suggests that the company was able to manage its working capital effectively during that period.
Looking back further, in Q1 2023, the cash conversion cycle was relatively lower at 44.98 days compared to the preceding quarters. However, there was a noticeable increase from Q1 to Q2 2023.
Comparing the latest performance to the same quarter in the previous year, there has been a slight increase in the cash conversion cycle from Q4 2022 (45.06 days) to Q4 2023 (46.50 days). This points to a potential slowdown in the company's cash conversion efficiency during the current year-end period.
Overall, Encompass Health Corp's cash conversion cycle has displayed some variability in recent quarters, with fluctuations in the efficiency of its working capital management. Monitoring this metric closely can help identify trends in the company's operational and financial performance.
Peer comparison
Dec 31, 2023