One Reason Matthews International’s Earnings Aren’t So Hot

July 14, 2011
Advertisement

It takes money to make money. Most investors know that, but with business media so focused on the “how much,” very few investors bother to ask “how fast?”

When judging a company’s prospects, how quickly it makes real cash money can be just as important as how much it’s currently generating in the accounting fantasy world we call “earnings.” It’s one of the first metrics I check when I’m hunting for the market’s best stocks. Today, we’ll see how it applies to Matthews International.

Advertisement

Let’s break this down

To measure how swiftly a company turns cash into goods or services and back into cash, we’ll lean on a quick, relatively foolproof metric known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a company to convert outgoing cash into incoming cash, the more powerful and flexible the profit engine is. The less money tied up in inventory and accounts receivable, the more that’s available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding (DIO) to days sales outstanding (DSO) and then subtract days payable outstanding (DPO). As in golf, the lower your score here, the better.

Read More

CDFuneralNews

CDFuneralNews

ConnectingDirectors.com is the leading online daily publication for funeral professionals with a reader base of over 45,000 of the most elite and forward-thinking professionals in the profession. With ConnectingDirectors.com we have created a global community through an online platform allowing funeral professionals to Stay Current. Stay Informed and Stay Elite.
CDFuneralNews
Advertisement

You may be interested

Is Facebook Doomed?… | DISRUPTu! 036
DISRUPTu
27 views
DISRUPTu
27 views

Is Facebook Doomed?… | DISRUPTu! 036

CDFuneralNews - January 23, 2018

Ryan breaks down the Facebook news feed changes and what they mean for your deathcare business, and why you shouldn't…

Funeral Director/Owner Paul Thomas Ayers Hawkins Wins December Sich Casket Giveaway
Funeral Industry Press Releases
29 views
Funeral Industry Press Releases
29 views

Funeral Director/Owner Paul Thomas Ayers Hawkins Wins December Sich Casket Giveaway

CDFuneralNews - January 23, 2018

Sich Casket has announced the winner of their monthly “Year of the Funeral Director” casket giveaway for December. The winner,…

UPDATE ON HUGE FUNERAL INDUSTRY CIVIL LAWSUIT | FUNERAL nation 101 – CHANGE MAKERS
FUNERAL Nation
48 views
FUNERAL Nation
48 views

UPDATE ON HUGE FUNERAL INDUSTRY CIVIL LAWSUIT | FUNERAL nation 101 – CHANGE MAKERS

CDFuneralNews - January 21, 2018

On this episode, we talk with a death care attorney who is handling a high profile civil lawsuit affecting thousands…

Comments