Option Care Health Inc (OPCH)

Short-term

Turnover ratios

Activity ratios provide valuable insights into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Option Care Health Inc. based on the data provided.

1. Inventory turnover:
Option Care Health Inc.'s inventory turnover has been decreasing slightly over the past five years, from 15.51 in 2019 to 12.12 in 2023. This indicates that the company is selling its inventory at a slightly slower rate, which could be a sign of changing demand patterns or inventory management issues.

2. Receivables turnover:
The receivables turnover ratio has generally been increasing over the years, from 7.12 in 2019 to 11.39 in 2023. This suggests that the company is collecting its accounts receivable more quickly, which is a positive indicator of efficient credit management and cash flow generation.

3. Payables turnover:
Option Care Health Inc.'s payables turnover has fluctuated over the years but has generally remained relatively stable. The slight decrease from 8.13 in 2019 to 7.79 in 2023 indicates that the company is taking slightly longer to pay its suppliers. This could be a strategic decision to better manage cash flow or negotiate better terms with suppliers.

4. Working capital turnover:
The working capital turnover ratio measures how effectively a company is using its working capital to generate revenue. Option Care Health Inc. has seen fluctuations in this ratio, with a notable decrease from 13.72 in 2021 to 9.04 in 2023. This reduction suggests that the company may be less efficient in utilizing its working capital to drive sales.

Overall, while the company's activity ratios show some fluctuations over the years, there are both positive and negative trends to consider. It is important for Option Care Health Inc. to continue monitoring and managing these ratios to ensure optimal efficiency in its operations.

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Average number of days

Option Care Health Inc.'s activity ratios indicate how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The trend shows an increasing number of days of inventory on hand over the past five years (from 23.53 days in 2019 to 30.11 days in 2023).
- This suggests that the company is holding more inventory, which may tie up working capital and potentially lead to increased carrying costs.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have decreased from 51.25 days in 2019 to 32.04 days in 2023.
- This indicates that Option Care Health Inc. is collecting receivables more quickly, which is a positive sign as it improves cash flow and reduces the risk of bad debts.

3. Number of Days of Payables:
- The number of days of payables has fluctuated over the past five years but has generally remained close to the 45-day mark.
- This stability suggests that the company is managing its payables effectively without causing financial strain or strain on supplier relationships.

In conclusion, while the increasing days of inventory on hand may raise concerns about efficient inventory management, the decreasing days of sales outstanding and stable number of days of payables reflect a generally positive trend in Option Care Health Inc.'s activity ratios, indicating good control over receivables and payables.

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Long-term

Option Care Health Inc.'s long-term activity ratios indicate the company's efficiency in utilizing its assets to generate sales over the years. The fixed asset turnover has shown a general increasing trend from 2019 to 2023, indicating that the company is generating more sales from its fixed assets each year. This suggests improved efficiency in utilizing machinery, equipment, and other fixed assets to generate revenue.

The total asset turnover ratio has also shown a steady increase from 2019 to 2023, indicating that Option Care Health Inc. has been more successful in generating revenue from all its assets over time. This improvement indicates that the company has become more efficient in managing its total assets to generate sales, which is a positive sign of operational efficiency and effective asset utilization.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios suggests that Option Care Health Inc. has been able to enhance its operational efficiency and improve its utilization of assets to drive sales growth over the years, which can lead to increased profitability and shareholder value in the long term.