Addus HomeCare Cor1

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Kenyatta University *

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EET 301

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Finance

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Nov 24, 2024

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Addus HomeCare Corp Ratio 2022 2021 Working capital 91,661,000 205,442,000 Current ratio 1.698923337 2.727869873 Debt ratio 0.140482775 0.239464534 Earnings per share 2.84438539 2.830991217 Price/earnings ratio 30.11929825 32.58188153 Total asset turnover ratio 1.013993693 0.912318156 Financial leverage 1.480560028 1.649856184 Net profit margin 0.048390319 0.052199019 Return on assets 0.049067478 0.047622113 Return on equity 0.072647347 0.078569638 Option Care Health Inc Ratio 2022 2021 Working capital 428,988,000 250,561,000 Current ratio 1.758799401 1.545059224 Debt ratio 0.341865043 0.381917348 Earnings per share 827.423086 777.53113 Price/earnings ratio 36.25301205 36.46153846 Total asset turnover ratio 1.267207228 1.23208206 Financial leverage 2.245818673 2.373459672 Net profit margin 0.038166315 0.040684108 Return on assets 0.048364631 0.050126159 Return on equity 0.000108618 0.118972417 The Bancorp Inc Ratio 2022 2021 Working capital 605,636,000 959,582,000 Current ratio 1.553961375 2.604891029 Debt ratio 0.140817285 0.161561506 Earnings per share 2.338191276 1.928741749 Price/earnings ratio 12.14782609 16.2642487 Total asset turnover ratio 0.050300392 0.046122165 Financial leverage 11.38709942 10.48846202 Net profit margin 0.327560097 0.350583762 Return on assets 0.016476401 0.016169682 Return on equity 0.187618421 0.169595098 Fiscal Year Comparison Addus HomeCare Corp

Addus HomeCare Corp's financial ratios reveal notable differences between the most recent fiscal year (2022) and the preceding year (2021), providing insights into the company's evolving financial landscape. Firstly, there is a positive shift in liquidity as evidenced by the current ratio, which increased from 1.6792 in 2021 to 1.6989 in 2022. This improvement signifies a strengthened capacity to meet short-term obligations with current assets, indicating enhanced financial flexibility. Operational efficiency also witnessed positive momentum, with the total asset turnover ratio rising from 0.9482 in 2021 to 1.0139 in 2022. This suggests an improved ability to generate revenue from the company's assets, reflecting enhanced operational effectiveness and potentially more efficient utilization of resources. Financial leverage and debt management portray a strategic shift. The financial leverage ratio decreased, indicating a reduction in reliance on debt for financing. Simultaneously, the debt ratio decreased, reflecting a healthier balance between debt and total assets. These changes suggest a prudent financial approach, focusing on minimizing financial risk and reinforcing the company's long-term stability. While profitability metrics present a mixed picture, with a slight decline in the net profit margin from 5.22% in 2021 to 4.84% in 2022, the increase in earnings per share (EPS) from $2.81 to $2.84 indicates improved profitability on a per-share basis. However, the nuanced decrease in the price-earnings ratio (P/E ratio) suggests potential market considerations around the company's valuation relative to earnings. This calls for a nuanced analysis of factors influencing profitability and market sentiment. In summary, Addus HomeCare Corp's financial ratios depict a positive trajectory in liquidity, operational efficiency, and financial prudence. The strategic reduction in debt reliance contributes to long-term stability. However, challenges in sustaining net profit margins warrant further examination. The nuanced interplay of these financial indicators

provides a comprehensive understanding of the company's financial health, offering valuable insights for strategic decision-making and future planning. Option Care Health Inc Working capital and liquidity improved significantly for Option Care Health Inc in 2022 compared to 2021. Working capital rose 71% from $250.6 million in 2021 to $429.0 million in 2022. This indicates Option Care Health Inc had substantially more current assets available to cover current liabilities last year. Additionally, the current ratio strengthened from 1.55 in 2021 to 1.76 in 2022, signaling enhanced liquidity. Option Care Health Inc also reduced reliance on debt financing in 2022 versus 2021. The debt ratio decreased from 0.382 to 0.342 over the two year period. This demonstrates that Option Care Health Inc lowered its leverage and dependence on debt funding. Profitability metrics were mixed for Option Care Health Inc between 2021 and 2022. On the positive side, earnings per share climbed 19% from $1.93 to $2.30 over the two years. Total revenue also grew a sizable 26% from $315.6 million in 2021 to $397.5 million in 2022, driven by expansions in both interest income and non-interest income. However, return on equity dropped precipitously from 11.9% in 2021 to just 0.1% in 2022. Return on assets also slipped slightly from 5.0% to 4.8% over the same period. This indicates that while overall profit levels grew, profit generation relative to shareholder equity and asset utilization declined year-over-year. In summary, Option Care Health Inc strengthened its financial position and performance in some key areas like working capital, liquidity and revenue growth between 2021 and 2022. But profitability relative to equity and assets worsened over the period. On balance, Option Care Health Inc enhanced its financial profile through improved liquidity, lower debt reliance and earnings growth, though returns were mixed. The Bancorp Inc

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Working capital and liquidity position declined for The Bancorp in 2022 versus 2021. Working capital decreased substantially from $959.6 million in 2021 to $605.6 million in 2022, a reduction of 37%. Likewise, the current ratio dropped sharply from 2.60 in 2021 to 1.55 in 2022, indicating weakened liquidity. The Bancorp had less current assets available relative to current liabilities at the end of 2022 compared to the prior year. However, The Bancorp improved its debt profile and leverage between 2021 and 2022. The debt ratio fell from 0.162 in 2021 to 0.141 in 2022, showing reduced dependence on debt financing. Financial leverage also decreased from 10.5 in 2021 to 11.4 in 2022, again demonstrating that The Bancorp lowered its reliance on debt funding year-over-year. In terms of profitability, The Bancorp delivered mixed results over the two year period. On one hand, earnings per share grew 21% from $1.93 in 2021 to $2.34 in 2022, reflecting improved bottom line profitability. Return on equity also rose from 17.0% to 18.8% over the same timeframe, indicating stronger profit generation relative to shareholder equity. On the other hand, net profit margin declined from 35.1% in 2021 to 32.8% in 2022. Return on assets held steady at around 1.6% in both periods, suggesting flat asset utilization for profitability. To summarize, while The Bancorp weakened its working capital and liquidity positions from 2021 to 2022, it did make progress reducing leverage and reliance on debt financing. Profit trends were mixed, with EPS and return on equity rising but net margins and return on assets flat or down slightly year-over-year. On balance, The Bancorp's financial performance was stable, with some metrics improving while others declined. Comparison Analysis In evaluating Addus HomeCare Corp's financial health through the lens of calculated financial ratios, discernible trends emerge between the most recent fiscal year (2022) and the preceding year (2021). Notably, the improvement in the current ratio from 1.6792 to 1.6989

indicates a strengthened ability to cover short-term liabilities with current assets. This signifies a healthier liquidity position, suggesting the business is better positioned to meet its immediate financial obligations. Concurrently, the rise in total asset turnover ratio from 0.9482 to 1.0139 reflects enhanced efficiency in utilizing assets to generate revenue, showcasing improved operational performance and resource utilization. Furthermore, the strategic reduction in financial leverage and debt ratio underscores the company's efforts to mitigate financial risk. With a decreased reliance on debt financing, Addus HomeCare Corp exhibits a more conservative financial structure, contributing to increased financial stability. However, the marginal decline in the net profit margin from 5.22% to 4.84% warrants further exploration into the underlying factors influencing profitability. Understanding the nuances of changes in operating expenses, market dynamics, or competitive pressures is crucial for a comprehensive assessment of the business's financial well-being. Earnings metrics, including an increase in earnings per share (EPS) from $2.81 to $2.84, signify improved profitability on a per-share basis. Nonetheless, the slight decrease in the price-earnings ratio (P/E ratio) may suggest a nuanced market response, indicating potential considerations around the company's valuation relative to earnings. The uptick in return on assets (ROA) and return on equity (ROE) suggests improved efficiency in generating profit from both assets and shareholders' equity. However, the decrease in ROE indicates a potential challenge in maintaining profitability relative to shareholders' equity, necessitating a deeper exploration of the underlying causes. Option Care Health Option Care Health displays positive signs of financial health, particularly in terms of liquidity and debt management. The company grew its working capital substantially from $250.6 million in 2021 to $428.9 million in 2022, a 71% increase. This indicates greater

capacity to fund near-term obligations. Reinforcing this, the current ratio rose from 1.54 in 2021 to 1.76 in 2022, showing strengthened liquidity. Additionally, Option Care Health reduced reliance on leverage, with the debt ratio declining from 0.382 to 0.342 over the two years. Lower financial leverage provides more flexibility and stability. Overall, improving working capital, current ratio, and declining debt dependency demonstrate Option Care Health has enhanced its financial foundation. Profitability and efficiency metrics for Option Care Health are reasonably steady, with a few concerns. On the positive side, earnings per share grew a steady 7% from 2021 to 2022, from $777.53 to $827.42. This reflects consistent bottom-line profit generation. However, net profit margin slipped slightly from 4.1% to 3.8% over the same period, suggesting some challenges with cost management impacting profit per dollar of revenue. Return on assets also dropped marginally from 5.0% to 4.8%, indicating somewhat weaker asset utilization for driving profits. But these declines are relatively minor. The high 36x price-to-earnings ratio also implies the market sees growth opportunities ahead. The most worrisome profitability metric for Option Care Health is the plunge in return on equity from 11.9% in 2021 to just 0.01% in 2022. This sharp reduction in profitability relative to shareholder equity warrants further diagnosis. Potential factors could include one-time charges depressing net income, issuing significant new equity, or subpar capital management. More details would be needed to pinpoint the drivers of this downward trend. But the equity returns face clear challenges. In summary, Option Care Health shows largely positive signs of financial health from its improving liquidity, debt reduction, and steady earnings per share. Minor concerns exist around cost management and asset efficiency. However, the dramatic drop in return on equity due to unknown factors merits further analysis to determine why capital profitability has

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deteriorated. With some targeted diagnostics, Option Care Health seems positioned for overall financial stability and success. But optimizing equity returns is a top priority. The Bancorp Inc The Bancorp displays some signs of weakened short-term financial health but improved long-term stability between 2021 and 2022. Working capital dropped substantially from $959.6 million to $605.6 million over the two years, concerning for liquidity to cover near-term obligations. Reinforcing this, the current ratio declined sharply from 2.60 to 1.55, well below the 2.0 rule-of-thumb for adequate liquidity. The Bancorp's capacity to handle short-term demands has clearly been reduced. However, the debt ratio fell from 0.162 to 0.141, showing The Bancorp has lessened dependence on leverage and improved long-term stability. But near-term liquidity management is a challenge. Profitability presents a mixed picture for The Bancorp. On the positive side, earnings per share grew a solid 21% between 2021 and 2022, from $1.93 to $2.34, demonstrating strong bottom-line profit generation. Return on equity also improved slightly from 17.0% to 18.8%, indicating marginally better capital efficiency. However, net profit margin declined from 35.1% to 32.8% over the two years. This suggests revenue growth is not keeping pace with expenses, pressuring profit per dollar earned. Flat return on assets of 1.6% also implies challenges with using assets to drive profits. The decline in The Bancorp's price-to-earnings ratio from 16.3x to 12.1x implies the market sees some challenges in maintaining strong earnings growth. While profits are up, investors appear concerned about sustainability. Overall profitability is mixed, with EPS gains but weaker margins and returns on assets and equity. There are positive signs but also clear concerns on the profit front. In summary, The Bancorp's financial health shows some short-term vulnerabilities from declining working capital and liquidity but improved long-term stability from lower

leverage. Profitability is mixed with EPS gains but weaker efficiency in generating profits from revenue, assets and equity. More information on the drivers and projections for working capital, liquidity management, and profitability could clarify The Bancorp's ability to maintain stable financial health. But the current situation appears relatively balanced between progress and challenges. Short-Term Financing Addus HomeCare Corp, as reflected in its current financial information, possesses various potential short-term financing sources that can play a pivotal role in augmenting its financial health. Firstly, the existing revolving credit facility provides the company with flexibility in accessing funds as needed. With $134,853,000 available at the end of 2022, the revolving credit line allows Addus HomeCare to manage short-term cash needs, supporting working capital requirements or immediate financial demands. This source enables the business to maintain agility and responsiveness to fluctuations in cash flow. Additionally, the business's term loan under the credit facility serves as another short- term financing avenue. While there is no outstanding balance specified for the current year, the availability of this term loan provides a potential mechanism for Addus HomeCare to secure short-term funds for specific projects or operational needs. This flexibility allows the business to align its financing strategy with the evolving requirements of its operations. By leveraging these credit facilities judiciously, the company can bridge short-term funding gaps and enhance its overall financial resilience. Moreover, exploring accounts receivable financing can be instrumental in bolstering short-term liquidity. With accounts receivable totaling $125,501,000 at the end of 2022, the business can consider factoring or receivables-based financing, allowing it to swiftly convert outstanding receivables into immediate cash. This approach not only accelerates cash inflows but also improves working capital efficiency, supporting the company's ability to meet short-

term financial obligations and invest in growth opportunities. In summary, a strategic combination of these short-term financing sources, including credit facilities and receivables financing, provides Addus HomeCare Corp with the means to address immediate financial needs, optimize liquidity, and navigate dynamic business conditions effectively. Option Care Health With working capital declining by 41% and the current ratio dropping from 1.75 to 1.54 between 2021 and 2022, Option Care Health needs an infusion of short-term funding to restore financial flexibility. This will enable Option Care Health to meet near-term obligations, invest in growth, and improve its liquidity position. Select financing sources that provide quick cash while maintaining the recent debt reduction progress must be pursued. Working capital loans from commercial banks are one option to inject funding without high costs or diluting shareholders. These loans use accounts receivable, inventories, and other working capital assets as collateral while providing cash for operations and expansion. Given Option Care Health's size, major banks should have appetite for a structured working capital lending facility. It infuses cash while leveraging the current asset base. Factoring receivables is another fast financing source for Option Care Health. Rather than waiting 30-90 days for customer invoices to be paid, selling the receivables to a factor immediately generates cash, minus a small discount fee. Healthcare billing cycles can be lengthy, so factoring converts receivables into instant liquidity. This can help fund growth in the near-term as revenue ramps up. Since Option Care Health provides extensive healthcare services, equipment leasing also warrants consideration. Financing companies can lease specialized clinical machinery and devices to Option Care Health rather than requiring large upfront capex. This preserves

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capital while still gaining access to essential healthcare equipment. As revenue grows, owned-equipment purchases can increase. Finally, expanding existing bank credit lines, if available, could be a cost-effective financing option. Option Care Health improved its debt profile from 2021 to 2022. If current lenders see this progress, higher credit limits may be supported, enabling more short-term borrowing under favorable bank terms. This efficiently leverages strengthened borrower metrics. A thoughtful mix of working capital loans, factoring, leasing, and expanded debt facilities can give Option Care Health the firepower to drive growth in the near-term while retaining its improved leverage position. The goal is quickly and cost-effectively bridging the gap until operating cash flows catch up with expanding business needs. With several tailored short-term financing sources, Option Care Health can restore depleted liquidity and working capital.

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