Select Medical Holdings (SEM)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 1.36 | — | — | 0.41 | — |
| Days of sales outstanding (DSO) | days | 53.15 | 52.46 | 50.62 | 56.94 | 50.25 |
| Number of days of payables | days | 10.41 | 11.44 | 15.15 | 12.79 | 10.68 |
| Cash conversion cycle | days | 44.10 | 41.03 | 35.48 | 44.56 | 39.58 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 1.36 + 53.15 – 10.41
= 44.10
The trend in Select Medical Holdings Corporation's cash conversion cycle over the past five years indicates fluctuations in the efficiency of its working capital management. The cycle decreased from 39.58 days in 2019 to 36.17 days in 2021, suggesting an improvement in the company's ability to convert its resources into cash. However, it increased to 45.45 days in 2020 before declining again in 2023 to 40.40 days.
Overall, the company's cash conversion cycle has shown variability, indicating potential challenges in managing cash flows efficiently. Management may need to focus on optimizing inventory turnover, accounts receivable collection, and accounts payable management to enhance the company's cash conversion cycle and enhance overall liquidity positions.
Peer comparison
Dec 31, 2023