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Why do you need to know LTM?       If you have data that compiles the last 12 months of the company’s performance you gain a better understanding of how the company’s financial ratios have been affected by these challenging economics scenarios.
Companies are zeroing in on their Cash Operating Cycle in response to tighter credit markets, higher borrowing and operating expenses and greater uncertainty. How do your solutions help clients better cash operating cycle...

FinListics Bizdom: Prospecting for Better Leads

Critical activities in building a pipeline and growing sales include identifying targeted accounts, prioritizing new accounts and determining which existing accounts are worth efforts to expand deal size.

The FinListics Prospecting Tool helps you identify prospects and clients that potentially benefit the most from your solutions and, therefore, have a higher propensity to buy.

Many companies today are focusing even harder on improving their management of the Cash Operating Cycle (Days in Inventory + Days Sales Outstanding - Days Purchases Outstanding).

Suppose you provide solutions that help clients better manage Days in Inventory for manufacturers of personal care products

You want to find all personal care product companies meeting the following criteria:

    • Revenue greater than US $500 million
    • Headquartered in North America
    • Days In Inventory underperforming the top 25% of their industry
Company Revenue ($millions) Days in Inventory Trend Benchmark Cash Flow from Improving Performance Relative Cash Flow Opportunity (ROC)
Company A $10,000M 110 95 $ 50 0.5%
Company B $ 5,000M 150 120 $200 4.0%
Company C $ 2,000M 175 125 $150 7.5%

Industry Benchmark: 100 days in Inventory

Traditional prospecting relies heavily on Revenue size. The larger the company, the bigger its challenges and its budget. In this example, Company A is the highest priority based on revenue.

Another approach is to target companies with the largest Cash Flow Value from Improving Performance, which is Company B.

But the real question is “What’s the prospect’s propensity to invest in your solutions?” Powerful insights into this question are provided by the Relative Cash Flow Opportunity (RCO). 

RCO is the Cash Flow from Improving Performance expressed as a percentage of Revenue.

It’s also a measure of relative pain. Company C is the top priority since it has the highest relative pain, even though it has the lowest revenue and not the highest Cash Flow from Improving Performance.

B!zdom: Imagine you’re a sales person spending most of the year pursuing Companies A and B with limited success, only to find out much later in the year that Company C has the highest propensity to invest in your solutions — and would be likely to have the shortest sales cycle.