Reflections from Turnaround and Crisis Managers

The following sections are included:Michael F. Gries and Michael P. Healy — Working Capital: How It Influences Cash FlowIntroductionOverview of Working Capital and Its ComponentsCashCash Equivalents (Marketable Securities)Accounts ReceivableInventoryOverview of the Cash Conversion CycleNet Working CapitalAccounts PayableAccrued ExpensesOther Types of Working CapitalAccounting Profits vs. Cash ProfitsWorking Capital ManagementConsiderations When Making Working Capital Management DecisionsCash BalancesCredit Terms and DiscountsInventory LevelsCommon Pitfalls of CompaniesFailure to Properly Assess the Creditworthiness of Customers and SuppliersSupplier and Customer ConcentrationDiscounting Receivables to Accelerate Cash ConversionLack of Asset and Liability MatchingFailure to Forecast and Adjust for SeasonalityOverengineering Cash Management SystemsSummarySelected Additional ReferencesBarry L. Kasoff and Kenneth B. Furry — A Cash-based Approach to Better Business InformationThe Nature of CashThe Value of Cash-based ReconciliationTurnarounds: A Bad Situation Made WorseCrisis ScenarioBroken CommunicationsCash Data and a Powerful ModelA Systematic Solution — Getting the DataBuilding the ReconciliationModel-based AnalysisRed FlagsBig RamificationsHard ConclusionsImpact on ProfitabilityLayers of AnalysisFoundation for a Turnaround — Good Data Means Better CommunicationCreating a Cashbook and Accrual-Basis StatementsPutting First Things FirstThe Hard Way Is Often the Right WayBaker Smith, CTP — The Balance Sheet Made Me Do It: Killing the Company by Squeezing CashMichael Chartock and Wendy Landon — The Importance of Cash Flow in the Retail ContextFive IndicatorsRetailers Are Electing to Retain “Costly” CashLack of Cash Usually Leads to Quick LiquidationCash Is the “Reason to Exist”Cash Currently Is the Principal “Circuit Breaker”Cash “War Chests” Are Built Heading into BankruptcyConclusionRandall S. Eisenberg and Armen Emrikian — Prioritizing Liquidity During Difficult TimesHoward Brod Brownstein, CTP — Manage for Cash