Critical numbers – Your stock turn
If you sell stock or inventory, it’s essential you understand stock turn and how to increase it. Slow-moving, obsolete, or ‘dead’ stock will seriously reduce both your cashflow and your ability to increase your profit. The longer stock takes to sell, the longer you...
Critical numbers – Your lock up days
Your lock up days is the number of days it takes to convert your debtors, stock and work in progress into cash. The higher your lock up days, the more cash is needed in the business (either from you or the bank), and the higher the risk of losing that cash. Worse,...
Critical numbers – The working capital cycle
Profitable businesses can go broke simply because they don’t manage their working capital cycle and run out of cash. Your working capital cycle is the number of days your cash is tied up to take your goods and services through the sales process. The longer the...