HealthStream Inc (HSTM)

Days of sales outstanding (DSO)

		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
Receivables turnover		7.26	7.96	6.70	5.72	6.25	8.04	7.43	6.34	7.35	8.27	7.73	6.64	5.31	8.11	7.30	7.21	8.37	8.89	8.34	5.96
DSO	days	50.29	45.86	54.46	63.83	58.42	45.41	49.11	57.57	49.65	44.15	47.20	55.01	68.73	45.02	49.99	50.64	43.63	41.05	43.79	61.23

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 7.26
= 50.29

Healthstream Inc's Days Sales Outstanding (DSO) is a measure that indicates the average number of days it takes for the company to collect revenue after making a sale. A lower DSO is generally preferred as it signifies quicker collection of receivables, indicating efficient cash flow management.

Analyzing the DSO trend of Healthstream Inc over the past eight quarters, we observe fluctuations in the collection period. In Q1 2023, the DSO stood at 63.83 days, showing a significant increase from the previous quarters. This rise in DSO could indicate potential challenges in collecting receivables promptly, leading to extended cash conversion cycles.

Contrastingly, in Q3 2022 and Q4 2023, the company managed to reduce its DSO to 45.40 days and 45.86 days, respectively, reflecting improved efficiency in collecting payments from customers. This decline in DSO suggests effective credit management practices and a shortened cash conversion cycle.

Furthermore, the DSO in Q2 2023 and Q1 2022 exceeded 50 days, indicating delayed collection of sales proceeds during these periods. It is crucial for Healthstream Inc to closely monitor its DSO to ensure timely collection of accounts receivable and avoid potential liquidity issues.

Overall, fluctuations in Healthstream Inc's DSO highlight the importance of actively managing accounts receivable to optimize cash flow and enhance the company's financial stability. Periodic monitoring and analysis of DSO trends can provide insights into the effectiveness of the company's credit policies and collection procedures.