AdvancedMAD Academy0:46Fundamentals

How Long Your Cash Is Stuck

The cash conversion cycle counts the days between paying for inventory and collecting from a customer — and it can be negative.

0:46 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00There is a gap between paying suppliers and getting paid. It costs money.
  2. 0:05The three periods. Days holding inventory, plus days waiting for payment, minus days before you pay.
  3. 0:15What a long cycle costs. Every day in the cycle is a day the business is funding itself with something.
  4. 0:24The negative cycle. Collect before you pay suppliers and customers fund your growth for free.
  5. 0:33The warning sign. Receivable days rising faster than sales means customers are paying slower.
  6. 0:41Track the days, not just the balances.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
How Long Your Cash Is Stuck — MAD Academy Training Video · MadStockAlerts