Cash Conversion Cycle
2 July 2021
Cash Conversion Cycle is a measure of how healthy the cash flow position of a business is. The Cash Conversion Cycle metric basically measures the length of time it takes to convert its goods and services into actual cashflow.
CCC = DIO + DSO – DPO
Where:
DIO represents DAYS INVENTORY OUTSTANDING
DSO represents DAYS SALES OUTSTANDING
DPO represents DAYS PAYABLE OUTSTANDING
This indicator is included in the book: Key Performance Indicators – the 75+ measures every manager needs to know, which contains an in-depth description of this KPI, as well as practical advice on data collection, calculations, target setting, and actual usage.
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