Cash conversion cycle, days

Cash conversion cycle, days is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Also called the Net Operating Cycle or simply Cash Cycle, CCC attempts to measure how long each net input dollar is tied up in the production and sales process before it gets converted into cash received.

This metric takes into account how much time the company needs to sell its inventory, how much time it takes to collect receivables, and how much time it has to pay its bills.

The formula for Cash conversion cycle, days is:

Cash conversion cycle, days = Inventory turnover, days + Accounts receivable turnover, days – Accounts payable turnover, days