Cash Conversion Cycle (CCC): What Is It, and How Is It Calculated?
The cash conversion cycle is the amount of time your company takes to convert your inventory and other investment resources into cash. It’s also referred to as Net Operating Cycle or Simple Cash Cycle.
What Is the Cash Conversion Cycle?
Your cash conversion cycle is one measure of your company’s efficiency and short-term liquidity. It tells you how long it takes your company to turn what it’s invested for generating sales into cash, so a lower value is better. Your cash conversion cycle is an important financial reporting ratio to monitor because it helps your analysts plan your business’s cash flow.
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