Title: Selling Your $5M Business? Optimize Your Cash Conversion Cycle to Maximize Exit Value Tagline: Selling Your $5M Business? Optimize Your Cash Conversion Cycle to Maximize Exit Value Problem: John, a 62-year-old owner of a thriving specialty woodworking business, "Fine Finishings," is preparing to sell his company, currently valued at $5 million. He's concerned about maximizing his return and ensuring a smooth transition. His business has a relatively long cash conversion cycle due to slow-moving inventory and a lenient payment policy for long-standing clients. This potentially diminishes the attractiveness of his business to buyers and could negatively impact the final sale price. John needs to understand the impact of his cash conversion cycle on his business valuation and identify actionable steps to improve it before going to market. Solution: By using the Cash Conversion Cycle Calculator, John can pinpoint the areas dragging down his cash flow: high inventory holding periods and slow accounts receivable collection. He can then implement strategies to reduce inventory levels (perhaps through targeted promotions or better inventory forecasting) and tighten payment terms for customers. Modeling these changes in the calculator demonstrates the potential impact on his cash flow and, consequently, his business's perceived value. Additionally, the Times Interest Earned Ratio Calculator helps John understand how improved cash flow strengthens his company's ability to meet its debt obligations, further boosting its appeal to potential buyers. Finally, John can consider the Agent Labor Arbitrage Calculator to see if any of his labor costs could be improved through outsourcing. ROI: Reducing his cash conversion cycle by 15 days, John could potentially increase his business valuation by $250,000 (assuming a conservative valuation multiple of 10x the improved annual free cash flow resulting from the reduced cycle). Furthermore, negotiating better payment terms with his suppliers could free up an additional $50,000 in working capital. The combined effect strengthens his negotiating position and ensures a higher sale price. Description: Unlock hidden value in your business before you sell. A shorter cash conversion cycle translates to a healthier balance sheet and a more attractive acquisition target. Use our Cash Conversion Cycle Calculator to identify areas for improvement. Category: Lead Gen