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How to interpret the cash conversion cycle?
A short thread 🧵🧵 with examples !!
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A short thread 🧵🧵 with examples !!
Like & Retweet for better reach !
Before understanding cash conversion cycle we should understand what are inventory days, debtor days and payable days.
Firstly let's look at its formula and then will look at its interpretation.
Firstly let's look at its formula and then will look at its interpretation.
Cash conversion cycle is calculated as Inventory days + Debtor days - payable days. Inventory days + Debtor days is known as operating cycle.
Low-risk, High-return stocks are what we look for relentlessly
But many of them we know but ignore
some of them don't grab financial headlines
Here are 10 low-risk, high return stocks (that we ignore):
But many of them we know but ignore
some of them don't grab financial headlines
Here are 10 low-risk, high return stocks (that we ignore):
What I mean by “high-return”?
These stocks have OUTPERFORMED the market:
💹Chart with upwards trend Since IPO
💹Chart with upwards trend Over the last 5 Years or since IPO
These are all long-term winners that will keep on winning
These stocks have OUTPERFORMED the market:
💹Chart with upwards trend Since IPO
💹Chart with upwards trend Over the last 5 Years or since IPO
These are all long-term winners that will keep on winning
What do We Mean by “low-risk”?
A combination of:
❣️Great management
❣️Broad moat
❣️Financially strong
❣️High ROCE
❣️Low Disruption/Dilution/Volatility
❣️Consistent Organic Growth
❣️Assorted Customers/Suppliers
❣️Low debt
A combination of:
❣️Great management
❣️Broad moat
❣️Financially strong
❣️High ROCE
❣️Low Disruption/Dilution/Volatility
❣️Consistent Organic Growth
❣️Assorted Customers/Suppliers
❣️Low debt
#TweetStorm - Expensive or deserves to be Expensive ? 1)One thumb rule for screening expensive companies is Market Cap to Sales or Enterprise Value to Sales. A 10x or more is generally expensive unless the company can grow sales rapidly or has extremely high Net Profit Margins.
2)Another way to look at expensive is if the Market Cap is equal to the Total Sales of the Addressable Market Size. This would lead to company having to launch different products in the future.
3)May not be the approach to take a Sell Decision or a Short Sell Decision. Very few companies can command such high valuations. Thumb Rule is just to review the investment thesis and the quality of the business. If doubts on quality , get out.
