FIN%204260%20CFO%20Magazine%20Quote%20Illustrative

# FIN%204260%20CFO%20Magazine%20Quote%20Illustrative - which...

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The 2009 CFO Working Capital Scorecard has the following quote: … improving cash collections is a great way to drive cash generation," says Robert   Daleo, the company's CFO. "For us, one day of sales is around \$8 million, so if you   improve 10 days you've got 80 million bucks." PV = FV / [1 + ( k )( n / 365 )] or PV = FV / [1 + ( k / 365 )( n )] Calculate the present value of this improvement in working capital management
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Unformatted text preview: which lengthens the cash conversion period: 1. Draw timelines for the old timing versus the new timing assuming DSO improved from 40 days to 30 days. 2. Calculate the daily NPV of each (assume k =5%). 3. Calculate the difference. 4. Assume the change is permanent and calculate the value as a perpetuity. CF Cash Flow Per Period i Interest Rate Per Period PV Perp = =...
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