Cash Conversion Cycle
Working Capital & Cash Conversion
Working capital, the cash conversion cycle, and the gap between reported profit and actual cash position.
The cash conversion cycle
The time between paying suppliers and collecting from customers.
Days to Collect (DSO)
27
Days to Pay (DPO)
30
Cash Conversion Gap (days)
-3
Where the cash is
Cash on Hand
R4,347,676
Tied Up in Receivables
R948,020
Director's Loan
-R1,588,000
Net Working Capital Required
R546,362
Growth and cash
The cash tied up in working capital scales with revenue: each rand of new annual revenue ties up roughly R0.07 of it (27 days / 365).
Revenue Growth (12m)
-R1,409,874
Extra WC Required
-R104,292
Avg Monthly Profit
R54,231
Monthly WC Drain
-R8,691
Director's loan movements
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What would change the picture
The three levers on the cash conversion cycle, with their estimated impact at current scale:
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