We've covered working capital a few times in the past...
- 101 – What is working capital
- 201 – Working capital drivers
- 301 – Optimizing & analyzing working capital
But today we're covering probably the all-time most useful ratio when it comes to managing working capital... the Cash Conversi...
Installing a Financial Operating System
We're big fans (and users) of Gino Wickman's EOS (Entrepreneurial Operating System), which outlines a useful framework for business management. I'd highly recommend if you're in need of a basic structure for meetings, people management, and setting a company ...
1) The indirect method of cash reporting
The indirect method of reporting cash flow is what you'll see most often. It's the standard format across QuickBooks, other financial software, and for publicly-traded companies.
How it works
There are 3 sections of cash flow
- Operating cash = profit + d...
How to Optimize Working Capital
This is part 3 in a mini-series on working capital (check out part 1 here and part 2 here).
Let's recap the basics so far:
- What is working capital? Receivables (A/R) plus inventory minus payables (A/P). Don't forget to include credit cards.
- Why is it important?...