Analyzing the Company's Liquidity Using the Cash Conversion Cycle

During this program, you will learn how the bank lender should calculate and interpret the Cash Conversion Cycle formula to see its direct impact on the company’s liquidity. Included in the formula will be an assessment of acquiring inventory, collecting account receivables efficiently, and paying the account payables in a judicious manner. Additionally, this program will cover inventory accounting costing methods, financing inventory, and controlling inventory costs. The effective collection of receivables will also be reviewed including negotiating reasonable terms. Furthermore, the timing of paying the payables will be explored including the impact of taking discounts. The topic will also cover other company liquidity ratios including the current and quick ratios and the liquidity of the business owner/guarantor. The concepts of the Cash Conversion Cycle will be illustrated through a case study.

Topics covered in this session

• What Is the Cash Conversion Cycle? How Is It Calculated? How Does It Directly Impact a Company's Liquidity?
• Inventory Issues Including Costing Methods, Financing, and Cost Containment
• Receivables and Reasonable Terms
• Payables and the Benefit of Discounts
• Other Company Liquidity Ratios
• Liquidity Analysis of the Business Owner/Guarantor
• The Cash Conversion Cycle Applied Through Case Study