Overview

This Cash Conversion Excel Template is a financial management tool used to determine the ratio of the cash flows of a company to its net profit. In other words, it is a comparison of how much cash flow a company generates compared to its accounting profit. The Cash Conversion Ratio Formula:

Cash Conversion Ratio = Cash Flows / Net Profits

The result of the calculation can be summarized in the following:

  • If the ratio is anything above 1 – it means that the any has excellent liquidity
  • If the ratio is positive but below 1 – the company has a weak CCR
  • If the ratio is negative – the company is incurring losses
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