Definition
CCC measures how long cash is tied up in operations. It combines inventory days, receivables days, and payables days. Shorter CCC indicates better working capital efficiency. Negative CCC means the company collects before paying suppliers - a sign of strong bargaining power.
Formula
CCC = Days Inventory + Days Receivables - Days Payables
Example
91 days inventory + 50 days receivables - 73 days payables = 68 days CCC. Cash is tied up for 68 days from inventory purchase to customer payment.
FAQ
What is Cash Conversion Cycle (CCC)?
Days between paying for inventory and collecting from customers.
How do you calculate Cash Conversion Cycle (CCC)?
A common formula for Cash Conversion Cycle (CCC) is: CCC = Days Inventory + Days Receivables - Days Payables
Why is Cash Conversion Cycle (CCC) important?
Cash Conversion Cycle (CCC) helps investors evaluate efficiency and make more informed decisions.