Healthcare Services Group Inc (HCSG)
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 | 4.13 | 4.71 | 5.96 | 7.00 | 7.54 |
| Days of sales outstanding (DSO) | days | 84.08 | 74.13 | 67.18 | 52.97 | 67.73 |
| Number of days of payables | days | 18.59 | 15.19 | 14.76 | 11.57 | 11.24 |
| Cash conversion cycle | days | 69.61 | 63.65 | 58.38 | 48.40 | 64.03 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.13 + 84.08 – 18.59
= 69.61
The cash conversion cycle of Healthcare Services Group, Inc. has shown variability over the past five years. The trend indicates an increasing cycle duration from 47.92 days in 2020 to 67.53 days in 2023, with fluctuations in the intervening years. This suggests the company may be taking longer to convert its investments in inventory and accounts receivable into cash.
A longer cash conversion cycle may indicate inefficiencies in managing working capital or challenges in collecting receivables promptly, which could impact the company's liquidity and overall operational efficiency. It is important for Healthcare Services Group, Inc. to closely monitor and address factors contributing to the lengthening of its cash conversion cycle to ensure optimal cash flow management and financial health.