よくある質問
Cash Conversion Cycle FAQs
What is the cash conversion cycle (CCC)?
The cash conversion cycle (CCC) measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. It includes inventory days, receivables days, and payables days.
How do you calculate the cash conversion cycle?
The CCC is calculated using the formula: CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payables Outstanding (DPO). A lower CCC indicates better efficiency in managing cash flow.
Why is the cash conversion cycle important for businesses?
The CCC helps businesses understand their liquidity and operational efficiency. A shorter cycle means faster cash generation, while a longer cycle may indicate potential cash flow issues or inefficiencies in inventory or receivables management.