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High Cash Conversion Cycle Means Companies Are Vulnerable

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Global: Peaking net profit margin for Large and Medium companies, tough time for Small

Global: Peaking net profit margin for Large and Medium companies, tough time for Small | #ChartOfTheDay

 

  • Looking at all non-financial companies globally, grouped by size
  • Large and Medium companies are seeing peaking net margins
  • Small companies have had a tough time with negative margin in the past three years

 

Global: Falling efficiency due to malinvestment

Global: Falling efficiency due to malinvestment | #ChartOfTheDay

 

  • Fall in asset turnover hasn’t come from higher asset growth, but lower sales
  • Following the Global Financial Crisis (GFC), low-interest rate policies have led to malinvestments among corporates
  • Small companies have seen the largest fall in efficiency

 

Global: Cash conversion cycle shows vulnerability to a credit crunch and/or economic slowdown

Global: Cash conversion cycle shows vulnerability to a credit crunch and/or economic slowdown | #ChartOfTheDay

 

  • Cash conversion cycle (CCC) has risen for all companies following the GFC, but most for Small and Medium companies
  • The high CCC means that companies are more vulnerable to a credit crunch and/or economic slowdown

 

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Posted in Chart of the Day