Measures the time taken to convert inventory into cash through sales.

What it Measures ?

How long it takes to convert investment into cash.

Relevant StakeHolders 

CFO, Working Capital Manager

In-depth Use Case / Real-world Example

Cash Conversion Cycle is calculated by adding the number of days inventory is held, the number of days it takes to collect receivables, and subtracting the number of days it takes to pay accounts payable. For example, if inventory days are 30, receivable days are 40, and payable days are 20, the cycle is 50 days. A shorter cycle means better liquidity and efficiency in managing working capital.