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GuruFocus has detected 3 Warning Signs with First Majestic Silver Corp $AG.
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First Majestic Silver Corp (NYSE:AG)
Cash Conversion Cycle
8.27 (As of Dec. 2016)

Cash Conversion Cycle is one of several measures of management effectiveness. It equals Days Sales Outstanding + Days Inventory - Days Accounts Payable.

First Majestic Silver Corp's Days Sales Outstanding for the three months ended in Dec. 2016 was 8.76.
First Majestic Silver Corp's Days Inventory for the three months ended in Dec. 2016 was 7.9.
First Majestic Silver Corp's Days Accounts Payable for the three months ended in Dec. 2016 was 8.39.
Therefore, First Majestic Silver Corp's Cash Conversion Cycle (CCC) for the three months ended in Dec. 2016 was 8.27.


Definition

Cash Conversion Cycle (CCC) measures how fast a company can convert cash on hand into even more cash on hand. This metric looks at the amount of time needed to sell inventory, the amount of time needed to collect receivables and the length of time the company is afforded to pay its bills without incurring penalties.

Cash Conversion Cycle is one of several measures of management effectiveness.

First Majestic Silver Corp's Cash Conversion Cycle for the fiscal year that ended in Dec. 2016 is calculated as

Cash Conversion Cycle=Days Sales Outstanding+Days Inventory-Days Accounts Payable
=8.34+33.86-17.15
=25.05

First Majestic Silver Corp's Cash Conversion Cycle for the quarter that ended in Dec. 2016 is calculated as:

Cash Conversion Cycle=Days Sales Outstanding+Days Inventory-Days Accounts Payable
=8.76+7.9-8.39
=8.27

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

Generally, the lower this number is, the better for the company. Although it should be combined with other metrics (such as return on equity and return on assets), it can be especially useful for comparing close competitors, because the company with the lowest CCC is often the one with better management.


Be Aware

CCC is most effective with retail-type companies, which have inventories that are sold to customers. Consulting businesses, software companies and insurance companies are all examples of companies for whom this metric is meaningless.

The CCC is one of several tools that can help you evaluate management, especially if it is calculated for several consecutive time periods and for several competitors. Decreasing or steady CCCs are good, while rising ones should motivate you to dig a bit deeper.


Related Terms

Days Sales Outstanding, Days Inventory, Days Accounts Payable,Return on Equity, Return on Assets


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

First Majestic Silver Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
CCC 54.4059.8649.199.4437.432.1326.68-0.77-17.1025.05

First Majestic Silver Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
CCC 38.065.6961.51-2.22-19.10-16.99-5.3616.7925.658.27
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