Understanding the Cash Conversion Cycle (CCC) for Business Efficiency

Investopedia, 8 min read

This lesson is an article published by Investopedia.

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What you'll get

Investopedia explains the cash conversion cycle as the days your money sits in inventory plus the days customers take to pay, minus the days suppliers give you to pay, which shows how long cash is tied up between buying materials and being paid. Its examples draw on the statements of larger companies, so take the idea and the formula and work it out with your own three numbers.

Do this week

Calculate the cash conversion cycle for your best seller, then write how many dollars you would need to cover it if orders doubled.