One nuance worth highlighting: FCF conversion can be temporarily juiced by stretching payables or tightening credit terms to customers. Both improve operating cash flow in the short run but shift risk onto suppliers (payables) or constrain customer liquidity (receivables). For credit analysts, a sudden improvement in conversion warrants a look at who's bearing the cost of that working capital efficiency.
One nuance worth highlighting: FCF conversion can be temporarily juiced by stretching payables or tightening credit terms to customers. Both improve operating cash flow in the short run but shift risk onto suppliers (payables) or constrain customer liquidity (receivables). For credit analysts, a sudden improvement in conversion warrants a look at who's bearing the cost of that working capital efficiency.
Great nuance, thanks for adding this context 🙏