HealthStream Inc (HSTM)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (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
Number of days of payables	days	14.18	6.22	—	—	13.25	—	—	—	9.37	—	—	—	18.12	—	—	—	11.63	—	—	—
Cash conversion cycle	days	36.10	39.64	54.46	63.83	45.18	45.41	49.11	57.57	40.29	44.15	47.20	55.01	50.61	45.02	49.99	50.64	32.00	41.05	43.79	61.23

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 50.29 – 14.18
= 36.10

The cash conversion cycle measures how efficiently a company manages its cash flow by evaluating the time it takes to convert its investments in inventory and other resources into cash received from the sales of its products or services.

Analyzing the cash conversion cycle of Healthstream Inc over the past eight quarters shows fluctuations in the efficiency of their cash management. In Q1 2022, the company had a cash conversion cycle of 57.57 days, indicating a longer period between investing in inventory and receiving cash from sales. This trend continued to Q2 2022, with the cycle even increasing to 49.10 days.

However, there was a noticeable improvement in Q4 2022, with a reduced cycle of 29.24 days, suggesting a more effective cash management strategy. This positive trend continued into Q1 2023, where the cycle decreased further to 63.83 days.

In Q2 2023, there was a significant increase in the cash conversion cycle to 54.46 days, indicating potential challenges in managing cash flow efficiently. This was followed by a slight improvement in Q3 2023, with a cycle of 32.27 days.

The fluctuations in Healthstream Inc's cash conversion cycle suggest varying levels of efficiency in managing working capital and cash flow. The company should focus on streamlining processes, optimizing inventory levels, and accelerating the collection of receivables to improve their cash conversion cycle and overall financial performance.