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  • LIQUIDITY

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    Adesina Olufemi
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    The document discusses ways to improve liquidity and cash flow from operations. It identifies three broad categories: revenue growth, operating margin, and working capital efficiency. For each category, it provides a first and second level breakdown of specific value drivers that can be influenced, such as volume, price, mix, costs of goods sold, inventory levels, and accounts receivable. The document concludes that improving cash flow requires finding ways to optimize these various drivers and provides some specific tips for decreasing inventory levels to free up cash.

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    Cash is king.

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    The document discusses ways to improve liquidity and cash flow from operations. It identifies three broad categories: revenue growth, operating margin, and working capital efficiency. For each category, it provides a first and second level breakdown of specific value drivers that can be influenced, such as volume, price, mix, costs of goods sold, inventory levels, and accounts receivable. The document concludes that improving cash flow requires finding ways to optimize these various drivers and provides some specific tips for decreasing inventory levels to free up cash.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    9 views11 pages

    LIQUIDITY

    Uploaded by

    Adesina Olufemi
    The document discusses ways to improve liquidity and cash flow from operations. It identifies three broad categories: revenue growth, operating margin, and working capital efficiency. For each category, it provides a first and second level breakdown of specific value drivers that can be influenced, such as volume, price, mix, costs of goods sold, inventory levels, and accounts receivable. The document concludes that improving cash flow requires finding ways to optimize these various drivers and provides some specific tips for decreasing inventory levels to free up cash.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 11

    LIQUIDITY

    Cash is King! But how do we improve it?

    Let’s start from cash flow from operations...

    There are three broad categories:


    REVENUE (GROWTH)

    Let us break it down into several value drivers.

    Each of which we can take actions to influence influence.

    First level breakdown:

    - Volume
    - Price
    - Mix
    REVENUE
    • Second level breakdown:

    - Returning customers
    - New customers
    - Discount schemes
    - Products
    - Markets
    OPERATING MARGIN
    • 2️⃣ OPERATING MARGIN

    Again these can be broken down into several value drivers.

    These are typically more within company control.

    Perhaps it's also why finance professionals usually work more on


    improving these.
    First level breakdown:

    - Cost Of Goods Sold


    - Sales, General, and Administrative expenses
    - Tax would also be included here
    Second level breakdown:

    - Better deals with suppliers


    - Consolidation of suppliers
    - Source cheaper parts
    - Marketing spend
    - White collar workers
    - Other overhead such as travel and entertainment
    (WORKING) CAPITAL EFFICIENCY

    Making a sale doesn't mean you get cash.

    Making purchase doesn't mean you have cash outlay.

    It's all about working capital management and if done poorly it can kill a business.

    If you carry inventory this is usually where the gold is hidden though.

    Here are some tips to decrease inventory (as the breakdown below only makes
    sense for inventory speaking of cash flow from operations)
    INVENTORY
    • Avoid overstocking
    - Increase cycle times
    - Decrease your safety stock
    - Use bundle pricing strategies
    - Discount obsolete inventory to keep it moving
    - Create a real-time link to sales to get re-order point right
    CONCLUSION
    • As you can see we're in no short supply of findings ways to improve
    cash flow!

    What are your best strategies for improving cash flow from
    operations?

    #finance #accountingandaccountants #cashflow
    PERSONAL

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