Analyzing the Louis Vuitton Buyout of Tiffany Part 3: Cash Conversion Cycle
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A couple weeks ago we valued the Coty buyout of Kylie Cosmetics at a $1.2 billion valuation.
Two weeks ago we started an analysis of Tiffany & Co (TIF) after it announced and agreed to a $16 billion buyout by Louis Vuitton Moet Hennessy (LVMUY).
In Part 1 I did a full preliminary analysis of Tiffany using the preliminary analysis checklist I’ve developed over the last 12+ years.
In Part 2 I explain what all the metrics and terms on the checklist mean and why they’re on the list.
Today, I do a full explanation of the cash conversion cycle (CCC) from the preliminary analysis checklist and tell you why its one of the most important metrics I look at, and how you can gain a massive advantage over others because almost no one else even talks about it.
“If you were to invest in the company (Tiffany) today the amount you could expect based on the profitability metrics compared to the company size – in this case, enterprise value – is only 1.8% based on free cash flow 4.6% based on operating profit.” One of my quotes from the video below.
Let’s get to it…
Here are some of the things I talked about in the 17-minute video above.
- Explained what the cash conversion cycle is
- Explained the 8 to 12 things it shows you fast
- Showed you how its calculated
- Showed you the importance of the numbers that go into it and what these tell you
- And more…
This video is part of the IloveValueInvesting Podcast. You can listen to this episode and our others in this podcast by going here.
If you have any questions at this point in the case study let me know in the comments below so I can answer them in future videos.
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Here are the Investopedia sites that are shown in the video if you want to learn about the cash conversion cycle in even more depth:
In the next video in this case study, I’m going to explain in-depth Enterprise Value (EV) which is another important metric on the preliminary analysis checklist
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