HealthStream Inc (HSTM)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	279,063	266,851	256,691	244,826	254,112
Total current assets	US$ in thousands	130,210	114,377	106,845	114,725	224,572
Total current liabilities	US$ in thousands	118,361	117,213	100,350	119,442	105,185
Working capital turnover		23.55	—	39.52	—	2.13

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $279,063K ÷ ($130,210K – $118,361K)
= 23.55

The working capital turnover ratio for Healthstream Inc has shown fluctuation over the past five years. In 2023, the ratio stood at 23.55, indicating that the company generated $23.55 in revenue for every dollar of working capital invested. This represents a significant increase compared to the previous year, where the ratio was not available.

The significant increase in the working capital turnover from 2021 to 2023 suggests that Healthstream Inc has become more efficient in utilizing its working capital to generate revenue. It is essential for the company to sustain or further improve this efficiency in the coming years to ensure optimal utilization of its resources.

On the other hand, the working capital turnover ratio in 2019 was considerably lower at 2.13, indicating a lower efficiency in generating revenue from working capital during that period. This highlights the importance for Healthstream Inc to continually monitor and optimize its working capital management practices to enhance operational efficiency and profitability.

Overall, the upward trend in the working capital turnover ratio in recent years reflects positively on Healthstream Inc's ability to effectively manage its working capital to drive revenue generation. It is crucial for the company to maintain this trend and focus on maximizing the efficiency of its working capital utilization to support long-term financial health and sustainability.