HCA Healthcare Inc. (NYSE:HCA)

Inventory Turnover

The inventory turnover ratio shows moderate fluctuations over the analyzed periods, generally remaining within a narrow range between approximately 4.1 and 4.8. The ratio slightly decreased during 2020, reaching its lowest point around 4.1, but it recovered gradually in 2021, ending near 4.8. This suggests consistent inventory management with periodic minor variations.

Receivables Turnover

The receivables turnover ratio exhibits some variability, oscillating between around 6.4 and 8.2. Notably, from early 2020 into the latter half, higher turnover values were observed, peaking at 8.17. This improvement indicates enhanced efficiency in collecting receivables during that period. Following this peak, turnover slightly declined but remained robust.

Payables Turnover

The payables turnover ratio displays a downward trend starting in 2020, dropping from approximately 3.1 to values close to 2.3 by early 2022. This decline indicates a lengthening in the average time taken to pay suppliers, suggesting a possible extension in payment terms or altered working capital management.

Working Capital Turnover

The working capital turnover ratio fluctuates significantly during the periods analyzed, with several pronounced peaks and sharp decreases. Extreme spikes were seen in mid-2019 and mid-2020, where the ratio soared above 40 and even reached 82.79, respectively. These outliers likely reflect atypical short-term financial adjustments rather than sustainable operational performance. Outside these anomalies, the ratio mostly ranges between 12 and 16, demonstrating variable efficiency in using working capital to generate revenue.

Average Inventory Processing Period

The average inventory processing period remains fairly steady, oscillating in the range of approximately 76 to 89 days. There is a slight upward trend in 2020, peaking around 88–89 days, followed by a reduction back to mid-70s days by early 2022. These variations imply modest changes in inventory holding times over the periods analyzed.

Average Receivable Collection Period

The average receivable collection period shows a subtle improvement beginning in mid-2019, decreasing from around 53 days to a low near 45 days in mid-2020. After that, it slowly increased again, stabilizing near 50–53 days. This pattern suggests temporary improvements in collections efficiency during 2020 that moderated in subsequent periods.

Operating Cycle

The operating cycle maintains relative stability, fluctuating between 126 and 140 days, with slight increases in late 2020 and early 2021. This indicates consistent overall operational timing, encompassing inventory processing and receivables collection durations.

Average Payables Payment Period

The average payables payment period reveals a clear upward trend starting in 2019, extending from roughly 115 days to over 150 days by 2021 and early 2022. This lengthening corresponds with the decreasing payables turnover ratio, indicating that the company is taking longer to settle its obligations, possibly to optimize cash flow or due to changing supplier terms.

Cash Conversion Cycle

The cash conversion cycle exhibits notable volatility, with values oscillating between positive and negative days. Early periods show positive cycles near 15 days, while from 2020 onwards, the cycle turned negative, reaching almost -32 days by late 2021. Negative cash conversion cycles indicate that the company collects cash from customers more quickly than it pays suppliers, which can improve liquidity. This trend may result from extended payment terms and improved receivables management during the analyzed period.

Supplies Trend

The value of supplies exhibited a general upward trend from March 2017 through December 2019, increasing from approximately $1,797 million to a peak of $2,232 million. However, this was followed by notable volatility in 2020, with a significant drop to $1,748 million in June 2020, likely reflecting disruptions linked to external conditions during that period. Subsequent quarters showed recovery and growth, with supplies reaching $2,463 million in September 2021 before slightly declining to $2,321 million by March 2022.

Inventories Trend

Inventories also generally increased over the reviewed periods, rising from $1,501 million in March 2017 to around $1,953 million by March 2020. Similar to supplies, inventories experienced a decrease to $1,834 million in June 2020, coinciding with the same period of external disruption. Thereafter, the inventories gradually rose again, peaking at $2,068 million in June 2021, before showing some fluctuation and a slight decline to $2,003 million at the end of the observed timeline.

Inventory Turnover Ratio Analysis

The inventory turnover ratio was stable and consistently above 4, indicating a healthy frequency of inventory replenishment relative to the cost of goods sold. From March 2018 to March 2022, the ratio fluctuated narrowly between 4.10 and 4.78. There was a minor downward trend during 2019 and 2020, reaching around 4.10 in December 2020, possibly reflecting slower inventory movement during periods of operational uncertainty. By the end of 2021 and into early 2022, the turnover ratio improved, returning close to its higher historical levels, which suggests an enhancement in inventory management or sales efficiency during those quarters.

Summary Insights

Both supplies and inventories show growth over the long term, interrupted by a clear downturn in mid-2020, likely attributable to unforeseen external factors affecting supply chains or demand. Recovery trends in late 2020 and 2021 indicate resilience and adaptation. The relatively stable inventory turnover ratio, despite some minor fluctuations, suggests effective inventory optimization throughout the periods analyzed. The observed data implies the company managed inventory levels with reasonable efficiency, balancing supply availability with operational needs while navigating volatility.

The analysis of the financial data reveals distinct trends in revenues, accounts receivable, and receivables turnover over the observed periods.

Revenues

Revenues generally show an upward trend from the first quarter of 2017 through early 2022. Initial values near $10.6 billion increase gradually, peaking around $15.3 billion in the fourth quarter of 2021. However, a noticeable decline occurs in the second quarter of 2020, where revenues drop from $13.5 billion to approximately $11.1 billion, likely reflecting external disruptions during that period. Following this dip, revenues recover steadily and exceed previous highs, indicating resilience and growth potential.

Accounts Receivable

Accounts receivable demonstrate a consistent increase across the majority of quarters, growing from about $5.7 billion in early 2017 to above $8.5 billion by the first quarter of 2022. Intermittent decreases, particularly around mid-2020, correlate with the revenue decline, suggesting tighter credit management or reduced billing during uncertain periods. The upward trajectory in accounts receivable aligns with rising revenues, indicating increased business volume but also potential exposure to collection risks.

Receivables Turnover

Receivables turnover ratios fluctuate between approximately 6.4 and 8.2 times per year, with a general pattern of improvement from 2017 into 2020. The highest turnover ratio, around 8.2, occurs during mid-2020, implying enhanced efficiency in collecting receivables despite the downturn in revenue in that period. After this peak, the ratio slightly declines but remains above earlier levels, suggesting sustained collection effectiveness.

In summary, the financial data indicates revenue growth with a temporary setback in 2020, matched by corresponding movements in accounts receivable. The receivables turnover ratio improvement during the revenue decline period reflects effective credit and collection management. Post-2020, the recovery in revenues and continued strong turnover ratios highlight operational resilience and improving financial health.

Supplies

The supplies balance consistently increased from March 31, 2017, at $1,797 million to a peak of $2,463 million by September 30, 2021. There was a noticeable decline during the second quarter of 2020 when supplies dropped sharply to $1,748 million, likely reflecting disruptions or changes in operational activity during that period. Post this decline, supplies rebounded strongly, reaching new highs through 2021 before slightly declining to $2,321 million in March 2022.

Accounts Payable

Accounts payable displayed a generally upward trajectory over the period analyzed. Starting at $2,233 million in March 2017, the value rose steadily, with some interruptions during 2019 but reaching a peak of $4,111 million in September 2021. Subsequent months saw a minor reduction to $4,010 million by March 2022, indicating a level of stabilization after the spike in payable obligations.

Payables Turnover Ratio

The payables turnover ratio demonstrated significant fluctuations. Initially rising from 2.81 in March 2018 to slightly over 3.16 by the end of that year, it then began a declining trend, bottoming at 2.31 by March 2022. This decline suggests a slower rate of paying off suppliers relative to purchases over recent periods. The decrease in turnover could indicate longer payment terms or slowed supplier payments.

Overall Trends and Insights

Throughout the period, supplies and accounts payable increased overall, indicating expanded procurement or inventory holding levels alongside increased liabilities to suppliers. The sharp dip in supplies during mid-2020 may reflect operational challenges, possibly linked to external factors impacting supply chains or consumption. Meanwhile, the gradual decline in the payables turnover ratio suggests that the company took longer to settle its accounts payable as time progressed, potentially stretching payment terms or encountering slower cash outflows to suppliers.

Working Capital

The working capital exhibited notable fluctuations across the observed periods. Initial levels in early 2017 remained relatively stable around the 3,500 million USD mark, followed by a decline in the first half of 2018, reaching a low near 2,644 million USD at the end of 2018. A sharp drop was observed in the first quarter of 2019 to 577 million USD, representing the lowest point in the dataset. Subsequently, working capital rebounded significantly through 2019, increasing to over 3,900 million USD by mid-year and stabilizing around 3,400 million USD at year-end. In 2020, the metric again declined in the first half but then surged to nearly 3,600 million USD by year-end. The upward trend persisted through 2021 and early 2022, with working capital reaching its highest level of approximately 4,488 million USD by March 31, 2022.

Revenues

Revenues demonstrated a generally positive trajectory with minor short-term variations. Starting around 10,600 million USD in early 2017, revenues increased steadily through 2018 and 2019, peaking at approximately 13,523 million USD in the fourth quarter of 2019. The first half of 2020 saw a notable decrease, reaching a low of around 11,068 million USD in the second quarter, likely reflecting market or operational disruptions. Following this decline, revenues accelerated, climbing to a new high of roughly 14,293 million USD at the end of 2020. Subsequent quarters in 2021 and early 2022 maintained strong performance with revenues consistently above 14,000 million USD, reaching near 15,064 million USD by March 2022.

Working Capital Turnover

The working capital turnover ratio displayed considerable volatility, complicating straightforward interpretation. Early data are absent until the first quarter of 2018, where the ratio began at 11.42 and generally increased through mid-2019, peaking at a striking figure of 82.79 in the first quarter of 2019, an outlier likely driven by the exceptionally low working capital in that quarter. Aside from this extreme value, ratios mostly ranged from approximately 12 to 17, indicating variable efficiency in generating revenues from working capital. After the spike, turnover ratios declined and fluctuated, with a secondary elevated reading of 42.68 in the first quarter of 2020 correlating with a dip in working capital. The strength in turnover ratios declined thereafter but remained within a moderate band from mid-2020 to early 2022, suggesting a stabilization of working capital management efficiency.

Overall Insights

The analysis reveals a cyclical pattern in working capital, with significant troughs in early 2019 and mid-2020, coinciding with corresponding peaks in the working capital turnover ratio. Revenues displayed a generally upward trend with temporary setbacks in the early 2020 period. The interplay between working capital levels and turnover ratios suggests that periods of lower working capital were associated with higher turnover efficiency, though these may also indicate stress points or operational adjustments. The recovery and growth in both working capital and revenues through 2021 into early 2022 reflect improved operational conditions and potentially enhanced liquidity management.

Inventory turnover

The inventory turnover ratio shows a generally stable pattern over the observed periods, with values ranging from approximately 4.1 to 4.78. Starting at 4.65 in the first quarter of 2017 and fluctuating slightly, the ratio experiences minor declines around mid-2020, reaching its lowest point near 4.1. However, it recovers subsequently, rising to its highest recorded level of 4.78 by the first quarter of 2022. This indicates a consistent efficiency in managing inventory relative to sales or usage, with a slight dip possibly associated with external factors in 2020 followed by gradual improvement into 2022.

Average inventory processing period

The average inventory processing period inversely complements the turnover ratio, fluctuating mostly between 76 and 89 days. Initial observations start at 78 days and show moderate variability, with a notable increase during 2020, peaking around 88 to 89 days, which may suggest slower inventory movement during that time frame. Post-2020, the period declines steadily to 76 days by early 2022, indicating an improvement in inventory processing speed consistent with the observed increase in inventory turnover.

Overall trends and insights

The data reveals a stable and efficient inventory management system over the years, with temporary disruptions likely occurring around 2020, possibly due to external events impacting operations. The inverse relationship between inventory turnover and processing period is evident, as higher turnover corresponds with shorter processing times. Recovery and performance improvement are noticeable starting from late 2020 through early 2022, reflecting strengthened operational control or favorable market conditions.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates noticeable fluctuations from March 2017 through March 2022. Starting at a ratio of 6.71 in March 2017, there is a general upward trend observed with intermittent dips. The ratio peaks at 8.17 in June 2020, suggesting an improvement in the efficiency of collections during this period. Following this peak, there is a mild decline and stabilization around the 7.0 range in the subsequent periods, ending at 7.01 in March 2022. This pattern indicates that the company maintained relatively consistent management of receivables efficiency over the five-year span, with a significant but temporary enhancement around mid-2020.

Average Receivable Collection Period

The average receivable collection period inversely mirrors the turnover ratio, ranging from 54 days in March 2017 and demonstrating a gradual improvement in collection speed through mid-2020, reaching a low of 45 days in June 2020. This suggests that the company was able to reduce the time to collect receivables significantly during that timeframe. However, after June 2020, the collection period lengthens moderately, fluctuating between 46 and 53 days through March 2022. This indicates a slight easing of collection efficiency but still remaining better than the early periods evaluated.

Overall Analysis

Over the duration analyzed, both the receivables turnover ratio and the average collection period indicate that the company has experienced an improvement in managing its receivables, particularly notable in mid-2020. This improvement is reflected in a higher turnover ratio and shorter collection period. However, post mid-2020, there is a minor regression towards previous levels, suggesting some challenges or relaxation in credit collection policies or external factors impacting collections. Despite this, the efficiency remains generally stronger than the initial periods reported. Maintaining or enhancing collection effectiveness should remain a focus to sustain or improve liquidity.

The average inventory processing period exhibits minor fluctuations over the observed quarters. Starting from 78 days in the first quarter of 2018, the period shows a subtle upward trend through 2019 and 2020, peaking at 89 days in the second quarter of 2021. Following this peak, there is a visible reduction to 76 days by the first quarter of 2022, indicating an improvement in inventory turnover efficiency towards the end of the period.

The average receivable collection period remains relatively stable with modest variability. It begins at 54 days in the first quarter of 2018 and fluctuates within a range of 45 to 57 days across subsequent periods. A noticeable decrease to 45 days occurs in the second quarter of 2020, suggesting a temporary improvement in accounts receivable collection. However, the period rises again slightly, stabilizing around 50 to 53 days by early 2022, which reflects consistent management of receivables over time.

The operating cycle, representing the sum of the inventory processing period and the receivable collection period, follows a trend influenced by the components described. Initially at 132 days in early 2018, the cycle extends towards approximately 140 days between mid-2019 and mid-2021, indicating a prolonged use of working capital. Thereafter, a contraction to 126-128 days is observed in the final quarters, reflecting improved operational efficiency by reducing the time taken to convert inventory and receivables into cash.

Inventory Processing Period Trend

Gradual increase from 78 to peak at 89 days, followed by a decline to 76 days.

Receivable Collection Period Trend

Generally stable within a narrow band, with a brief dip in mid-2020 and a return to around 50 days thereafter.

Operating Cycle Trend

Initial stability, elongation to around 140 days between 2019 and mid-2021, then reduction to approximately 126-128 days.

Overall, the data reveals a period of increasing duration in working capital utilization followed by a noteworthy improvement in the efficiency of inventory management and receivable collection towards the end of the time frame. This pattern suggests responsive operational adjustments that likely contribute to improved liquidity and cash flow management in recent quarters.

Payables Turnover

The payables turnover ratio exhibits a generally declining trend from March 2018 to March 2022. Initially, the ratio increases modestly from 2.81 in March 2018 to a peak of 3.18 in December 2017, but starting from March 2019, the ratio begins a downward trajectory, moving from around 3.00 to a low of 2.31 by December 2021. This decrease indicates that the company is taking longer to pay its suppliers over the examined periods.

Average Payables Payment Period

The average payables payment period, expressed in number of days, moves inversely to the payables turnover ratio. Starting at 130 days in March 2018, the payment period decreases to a low of 115 days by December 2017 and December 2019, indicating quicker payments during these periods. However, from March 2020 onwards, there is a marked increase in the payment period, peaking at 158 days in March 2022. This suggests that the company is extending the time it takes to settle payables, reflecting a potential shift in working capital management or liquidity strategy during this interval.

Overall Trends and Insights

The data reveals a notable shift around early 2020 where the company began to lengthen its average payment period significantly. Correspondingly, the payables turnover ratio declined, confirming a reduction in the frequency of payables turnover. This pattern may be associated with changes in operational or financial policies, possibly influenced by external economic conditions. The increased payment period could enhance short-term liquidity but may also affect supplier relationships if the trend continues.

Average Inventory Processing Period

The average inventory processing period shows a generally stable trend between 76 and 89 days over the reported quarters. Starting at 78 days in early 2018, it peaked at 89 days in mid-2021 before gradually decreasing to 76 days by early 2022. This suggests a relatively consistent inventory turnover with minor fluctuations, and a slight improvement in recent periods indicating faster processing of inventory.

Average Receivable Collection Period

The average receivable collection period exhibits modest variability, ranging mostly between 45 and 57 days. It initially hovered around the low 50s, saw an improvement to 45 days in the second quarter of 2020, and stabilized around 50 to 53 days afterward. The brief improvement might reflect more efficient receivables management around mid-2020; however, subsequent quarters indicate a return to prior levels, signifying a steady collection timeframe overall.

Average Payables Payment Period

The average payables payment period reveals a notable upward trend, rising from approximately 115-130 days early on to a peak of 158 days in early 2022. After a minor decline in late 2018, the payment period steadily increased from 117 days in mid-2019 to above 150 days from late 2020 onwards. This indicates an extended payment cycle to suppliers, potentially improving cash flow by delaying outflows but possibly affecting supplier relationships.

Cash Conversion Cycle

The cash conversion cycle (CCC) demonstrates a significant decline over time, moving from positive single digits early on to negative values starting mid-2020 and reaching -32 days by early 2022. This marked decrease stems from the combined effects of a stable inventory and receivables period alongside the substantially extended payables period. The shift to a negative CCC indicates that the company increasingly delays payments longer than the time taken to collect receivables and process inventory, improving liquidity and cash management efficiency.