Fiducia TogetherCash conversion
How much of your profit turns into actual cash.
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.
What it means
Cash conversion is operating cash flow divided by operating profit, as a percentage.
Why it matters
A business converting 40% of its profit into cash has a problem in working capital, and the profit figure is flattering it.
What it looks like in practice
Persistently low conversion points at growing debtors, growing stock, or profit recognised ahead of cash. All three are fixable and none is visible on the profit and loss.
What to watch out for
Growth. A fast-growing business naturally has poor cash conversion because working capital is being consumed — see overtrading.
Where to get proper advice
Your accountant.
Where to read more
Last reviewed 2026-08-28 by Fiducia Together · Next review due 2027-08-28
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.