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Karnivesh

Simplifying finance.... • 4h

A finance leader once said something that changed how I look at businesses. “We were profitable on paper, but cash was always tight.” That’s when the cash conversion cycle started making sense to me. A company may sell today, wait weeks or months to collect payment, hold inventory in between, and still need to pay suppliers on time. Profits look healthy, but cash stays locked up. Different businesses handle this very differently. Some collect cash quickly and pay suppliers later, letting growth fund itself. Others grow revenue fast but tie up cash for long periods, making expansion stressful. This is why rapid growth doesn’t always mean stronger finances. Understanding the cash conversion cycle helps separate businesses that survive from those that struggle, even when both look profitable on the surface.

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