Cash conversion cycle: Difference between revisions
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imported>Doug Williamson (Explain calculation.) |
imported>Doug Williamson m (Add link.) |
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* [[Order to cash cycle]] | * [[Order to cash cycle]] | ||
* [[Purchase to pay cycle]] | * [[Purchase to pay cycle]] | ||
* [[Ratio analysis]] | |||
[[Category:Cash_management]] | [[Category:Cash_management]] | ||
Revision as of 11:12, 6 February 2019
Financial ratio analysis - management efficiency ratios.
(CCC).
The cash conversion cycle indicates how long it takes a company to convert cash outflows into cash inflows.
For example in a manufacturing firm, the average length of time between payment for raw materials and other inputs, and the receipt of cash from the firm's customers.
The shorter the time, the less funding a company has to find.
The cash conversion cycle is calculated as:
Days inventory outstanding
ADD Days receivables outstanding
LESS Days payables outstanding
