HealthStream Inc (HSTM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 7.26 | 6.25 | 7.35 | 5.31 | 8.37 |
| Payables turnover | 25.73 | 27.56 | 38.93 | 20.15 | 42.53 |
| Working capital turnover | 23.55 | — | 39.52 | — | 2.13 |
Based on the provided activity ratios for Healthstream Inc, we can draw several insights:
1. Receivables Turnover: The receivables turnover measures how efficiently the company is collecting payments from its customers. An increasing trend in receivables turnover over the years indicates that Healthstream Inc has improved its ability to collect payments from customers. The ratio has fluctuated over the past five years, with a peak in 2019 at 8.37 and a decrease in 2020 to 5.31 before rebounding to 7.35 in 2021 and further to 7.26 in 2023.
2. Payables Turnover: The payables turnover ratio evaluates how quickly a company pays its suppliers. A higher payables turnover ratio suggests that Healthstream Inc is paying its suppliers more frequently. The ratio fluctuated over the years, with a notable decrease in 2020 to 9.57 before increasing to 17.76 in 2021 and further to 12.73 in 2023.
3. Working Capital Turnover: The working capital turnover ratio measures how efficiently a company generates revenue from its working capital. A higher working capital turnover ratio indicates that the company is generating more revenue with less investment in working capital. Healthstream Inc demonstrated a significant increase in this ratio from 2.13 in 2019 to 39.52 in 2021, suggesting improved efficiency in generating revenue from its working capital.
Overall, the trends in these activity ratios reflect Healthstream Inc's efforts in managing its working capital, accounts receivable, and accounts payable efficiently over the years. The company has shown improvements in its receivables and payables turnover, indicating better management of cash flows and working capital utilization. The substantial increase in the working capital turnover ratio signifies enhanced operational efficiency and revenue generation from the company's working capital.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 50.29 | 58.42 | 49.65 | 68.73 | 43.63 |
| Number of days of payables | days | 14.18 | 13.25 | 9.38 | 18.12 | 8.58 |
Healthstream Inc's activity ratios provide insight into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH): Unfortunately, specific data regarding Healthstream Inc's days of inventory on hand for the years provided is not available. This ratio measures how many days it takes for the company to convert its inventory into sales. A lower DOH indicates faster inventory turnover and better liquidity.
2. Days of Sales Outstanding (DSO): Healthstream Inc's days of sales outstanding have varied over the years, ranging from 43.63 days in 2019 to 68.73 days in 2020. DSO represents how long it takes the company to collect payments from customers after making a sale. A lower DSO is generally preferred as it indicates quicker cash conversion.
3. Number of Days of Payables: Healthstream Inc's number of days of payables has also fluctuated, with the range being from 16.90 days in 2019 to 38.13 days in 2020. This ratio reveals how long the company takes to pay its suppliers. A higher number of days of payables may suggest favorable credit terms with suppliers, but excessively delaying payments could harm relationships.
Overall, Healthstream Inc should aim to optimize its activity ratios by efficiently managing inventory levels, speeding up the collection of receivables, and effectively managing its payables to enhance its working capital management and overall financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 21.46 | 17.24 | 14.30 | 11.02 | 9.75 |
| Total asset turnover | 0.56 | 0.54 | 0.53 | 0.49 | 0.52 |
Healthstream Inc's long-term activity ratios have shown positive trends over the past five years. The fixed asset turnover ratio, which measures the efficiency of utilizing fixed assets to generate revenue, has steadily increased from 9.75 in 2019 to 21.46 in 2023. This indicates that the company has been able to generate more sales from its fixed assets over time, showcasing improved operational efficiency and asset utilization.
Similarly, the total asset turnover ratio, which indicates how effectively the company utilizes all its assets to generate revenue, has also shown an upward trend, increasing from 0.52 in 2019 to 0.56 in 2023. This suggests that Healthstream Inc has been able to generate more sales relative to its total assets, highlighting improved efficiency in overall asset management and revenue generation.
Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios reflects Healthstream Inc's ability to optimize its asset base and generate more revenue per dollar of assets invested, indicating positive long-term prospects for the company's operational efficiency and financial performance.