Cash Conversion Cycle (CCC)
What Is the Cash Conversion Cycle (CCC)? | Investopedia
- Working Capital = Current Assets - Current Liabilities, see balance-sheet
- Liquidity - cash needed in short term to finance operations
- Goal is to minimize while being able to pay bills
- Cash Conversion Cycle = Receivables Days + Inventory Days - Payable Days
- Working Capital Needed = Cash Conversion Cycle * Sales / Day
- Cash Flow Efficiency
- Goal is lowest possible CCC while paying your bills — low Receivables, low Inventories, high Payables
- Challenge: your customers and suppliers want the same thing.