Tag: DSO

Financial Ratios

See also: Quick Ratio Analysis Price to Book Value Analysis Price Earnings Growth Ratio Analysis Time Interest Earned Ratio Analysis Use of Financial Ratios Financial Ratios are used to measure financial performance against standards. Analysts compare financial ratios to industry averages (benchmarking), industry standards or rules of thumbs and against internal trends (trends analysis). The

Read More

Adding Value as a Financial Leader

The role of the CFO or financial leader of an organization used to be termed as a “numbers cruncher”. For many reasons, The Strategic CFO has been working tirelessly to coach, consult, and mentor CFOs, Controllers, and others in the finance and accounting function to go from being a number crunchers to a value-adding financial leader.

Read More

Black Friday

See also: Traditions Turned Financial Fluctuations Improving Profitability – Fuel for Growth Product Life Cycle Stages Beware of the J Curve Black Friday In America, Black Friday is an event that is not only the most shopped on day during a typical year, but it also generates huge sales. “Only in America do people trample

Read More

Turnover in Collections is Destroying Your DSO

One of our clients called us up because his DSO went from 34 days to over 72 days within a couple months. He couldn’t figure out what was causing his daily sales outstanding (DSO) to increase so dramatically in such a short time. When we came in the office to investigate, we found that there

Read More

Improving Profitability – Fuel for Growth

How do you focus on improving profitability instead of just boosting sales? 2016 wasn’t the best year for some of us, but the new year provides a perfect opportunity to reassess goals. An entrepreneur’s natural tendency is to increase sales in order to balance out last year’s financials. But what many entrepreneurs fail to consider is

Read More

Unlock Cash in Your Business

Unlocking cash in your business can make a major impact on valuation, cash flow, profitability, and so much more.  As the saying goes, “Cash is King.” However, there is often money lying around that is essentially “locked up” in the system. Unlocking Liquidity Liquidity is key to success. A company could sell all the widgets in

Read More

Collection Effectiveness Index (CEI)

See Also: CEI vs. DSO Key Performance Indicators (KPI’s) How Does a CFO Bring Value to a Company? 5 Stages of Business Grief Collection Effectiveness Index (CEI) The Collection Effectiveness Index, also known as CEI, is a calculation of a company’s ability to retrieve their accounts receivable from customers. CEI measures the amount collected during a time period to the

Read More

CEI vs DSO

Cash is king. A company must have a positive cash flow to stay afloat. Particularly in an economic downturn, our clients struggle to maintain a positive cash flow when sales are down. Fortunately, there are several metrics that you can use to monitor and improve your cash flow. One of the conversations we’ve begun to

Read More

Reducing Your Cash Conversion Cycle

What is the impact of reducing your cash conversion cycle?  Is it worth the effort?  In order to quantify the benefit of reducing your cash conversion cycle, it’s important to understand exactly what it is.  Definition of Cash Conversion Cycle Cash Conversion Cycle is a metric that expresses the length of time, in days, that it

Read More

Problem With Days Sales Outstanding Example

See also: Daily Sales Outstanding Calculation Operating Cycle Definition Unlock Cash in Your Business Turnover in Collections is Destroying Your DSO Daily Sales Outstanding (DSO) Dales Sales Outstanding Explanation Often days sales outstanding (commonly referred to simply as DSO) is used as a measure of the average number of days it takes for a company

Read More

Operating Cycle Definition

See Also: Operating Cycle Analysis Operating Cycle Definition The Operating cycle definition establishes how many days it takes for a company to turn purchases of inventory into cash receipts from its eventual sale. It is also known as cash operating cycle or cash conversion cycle or asset conversion cycle. Operating cycle has three components of

Read More

Operating Cycle Analysis

See Also: Operating Cycle Definition days inventory outstanding Cash Cycle day sales outstanding days payable outstanding Financial Ratios Operating Cycle Formula Complete operating cycle analysis calculations simply with the following formula: Operating cycle = DIO + DSO – DPO Where DIO represents days inventory outstanding DSO represents day sales outstanding DPO represents days payable outstanding

Read More