Definition: Stock days + debtor days - creditor days
Significance:
This shows how long the company has to finance its own stocks for. It measures the number of days between the initial cash outflow (when the company pays its suppliers) to the time it receives cash from customers.
Calculation:
The figures required have already been calculated on earlier pages of this tutorial.
Example
So, in M&S's case :
| Stock | 20 days |
| Debtor | 1.8 days |
| Creditor | (9.4) days |
| Cash-to-Cash days | 12.4 days |
Yardstick:
Companies that receive cash from their customers at the time of sale and that have their stock under good control, will have short cash-to-cash days similar to M&S.
Recommend ReadingBook offers!
|
|
Reminiscences of a Stock Operator
Edwin Lefevre |
| Our price: £6.50
Normally: £12.99 |
|
|
Extraordinary Popular Delusions and the Madness of Crowds
Charles Mackay |
| Our price: £9.90
Normally: £11.00 |
|
|
The Banker's Handbook on Credit Risk: Implementing Basel Pt. 2
Morton Glantz, Johnathan Mun |
| Our price: £36.79
Normally: £45.99 |