Tenet Healthcare Corporation (THC)
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 | 11.45 | 11.75 | 11.17 | 11.27 | 9.25 |
| Days of sales outstanding (DSO) | days | 54.12 | 58.48 | 54.13 | 57.10 | 54.38 |
| Number of days of payables | days | 39.22 | 43.62 | 37.81 | 36.96 | 35.92 |
| Cash conversion cycle | days | 26.35 | 26.61 | 27.48 | 31.40 | 27.70 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.45 + 54.12 – 39.22
= 26.35
The cash conversion cycle of Tenet Healthcare Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle improved to 51.72 days from 55.46 days in 2022. This indicates that Tenet Healthcare was able to manage its cash flows more efficiently in 2023 compared to the previous year.
In general, a lower cash conversion cycle is favorable as it indicates that the company is able to convert its investments in inventory and receivables into cash more quickly. This can lead to improved liquidity and working capital management.
Analyzing the trend over the last five years, Tenet Healthcare Corp. has generally maintained a relatively stable cash conversion cycle, with minor fluctuations. This suggests that the company has been consistent in managing its cash flows and working capital efficiency.
Overall, the decreasing trend in the cash conversion cycle from 2022 to 2023 is a positive sign for Tenet Healthcare Corp., indicating improved efficiency in managing its cash inflows and outflows. It is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure sustainable financial health and operational effectiveness.
Peer comparison
Dec 31, 2023