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)
- Funeral Cribs Episode 5 – Sunset Memorial Park, Alabama - January 18, 2018
- 5 Ways to Build Your Business - January 16, 2018
- Free Live Webinar: How Will The 2018 Tax Laws Affect Your Funeral Home? - January 15, 2018
You may be interested
Funeral Cribs Episode 5 – Sunset Memorial Park, AlabamaCDFuneralNews - January 18, 2018
The Sunset Memorial Park Funeral Home has had one major goal in mind from the time it started until now,…
Blog Archives Decedent’s Final Tweets… And They are HeartbreakingJustin Crowe - January 16, 2018
The digital age has created some fascinating unprecedented scenarios concerning legacy. Facebook chronicles our lives, so when my kids are…