One Reason Matthews International's Earnings Aren't So Hot
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.
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.
Latest posts by CDFuneralNews (see all)
- FrontRunner Announces Winning Deals From Final Four Challenge - March 20, 2018
- Homesteaders Forms Strategic Relationship With Local Technology Startup - March 20, 2018
- BLOOPERS, FACEBOOK ADS AND THE PERFECT FACEBOOK LEAD FORMULA | DISRUPTu! 041 - March 19, 2018
You may be interested
The Ignorance of saying !@$% FACEBOOK! | DISRUPT60 Episode 001Ryan Thogmartin - March 22, 2018
Many funeral directors and deathcare marketers are missing major opportunities to embrace the power of Facebook strictly because of stubbornness.…
This is What Deathcare Looks Like When Robot Funeral Directors Take OverJustin Crowe - March 20, 2018
What happens when robots take all the jobs? This is a common question that members of every industry fantasize about…
FrontRunner Announces Winning Deals From Final Four ChallengeCDFuneralNews - March 20, 2018
FrontRunner Professional has announced the winners of the FrontRunner Final Four Challengethat has been running in celebration of the NCAA…