Healthcare Services Group Inc (HCSG)
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 | 4.22 | 4.39 | 4.56 | 4.56 | 4.64 | 4.75 | 4.95 | 4.97 | 5.16 | 5.50 | 5.75 | 6.24 | 6.71 | 7.01 | 7.35 | 7.38 | 7.73 | 7.82 | 7.88 | 8.57 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Cash conversion cycle | days | 4.22 | 4.39 | 4.56 | 4.56 | 4.64 | 4.75 | 4.95 | 4.97 | 5.16 | 5.50 | 5.75 | 6.24 | 6.71 | 7.01 | 7.35 | 7.38 | 7.73 | 7.82 | 7.88 | 8.57 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 4.22 + — – —
= 4.22
The cash conversion cycle of Healthcare Services Group Inc has shown a consistent downward trend over the analyzed period from March 31, 2020, to December 31, 2024. The company's cash conversion cycle decreased from 8.57 days on March 31, 2020, to 4.22 days on December 31, 2024. This indicates that the company has been able to efficiently manage its working capital and convert its resources into cash at a faster rate.
A decreasing cash conversion cycle suggests that the company is managing its cash flows effectively, improving liquidity, and potentially reducing the need for external financing. A shorter cash conversion cycle means the company takes less time to convert its investments in inventory and accounts receivable into cash from sales.
Healthcare Services Group Inc's decreasing trend in the cash conversion cycle reflects improved efficiency in managing its operating cycle, which includes inventory turnover, accounts receivable collection, and accounts payable payment. This efficiency may result from better inventory management, faster collection of receivables, and optimized payment terms with suppliers.
Overall, the declining trend in the cash conversion cycle of Healthcare Services Group Inc indicates the company's ability to streamline its operations and optimize cash flow management, potentially leading to enhanced financial performance and operational effectiveness.