Written By As a journalist, I can provide you with information on the top cash management metrics to track. Cash flow management is a critical aspect of any business, and tracking the right metrics can help you stay on top of your finances and make informed decisions. Here are some of the top cash management metrics to track:
1. Cash Ratio: This metric measures a company’s ability to pay off its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates that a company is more capable of meeting its financial obligations.
2. Operating Cash Flow: This metric measures the amount of cash generated by a company’s operations. A positive operating cash flow indicates that a company is generating enough cash to cover its operating expenses.
3. Free Cash Flow: This metric measures the amount of cash a company generates after accounting for capital expenditures. A positive free cash flow indicates that a company has enough cash to invest in growth opportunities.
4. Days Sales Outstanding (DSO): This metric measures the average number of days it takes for a company to collect payment from its customers. A lower DSO indicates that a company is collecting payments more quickly, which can improve cash flow.
5. Cash Conversion Cycle (CCC): This metric measures the amount of time it takes for a company to convert its investments in inventory and other resources into cash. A shorter CCC indicates that a company is more efficient at managing its working capital.
By tracking these metrics, businesses can gain a better understanding of their cash flow and make informed decisions to improve their financial health. It’s important to note that these metrics should be used in conjunction with other financial statements and metrics to get a complete picture of a company’s financial health.
