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Cash Conversion Cycle

The cash conversion cycle (CCC) measures the rate at which your business converts its investments and inventory into cash.

What is the Cash Conversion Cycle (CCC)?

The cash conversion cycle (CCC) measures the rate at which your business converts its investments and inventory into cash. This metric helps companies manage their cash outflows effectively by letting them know when they’ll receive cash.

You can use this formula to calculate CCC:

CCC = days sales outstanding + days inventory outstanding - days payable outstanding

Lower CCCs are ideal for businesses, as they indicate their cash won’t be stuck in inventory and accounts receivable for a long time.

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Cash Conversion Cycle

What is the Cash Conversion Cycle (CCC)?

The cash conversion cycle (CCC) measures the rate at which your business converts its investments and inventory into cash. This metric helps companies manage their cash outflows effectively by letting them know when they’ll receive cash.

You can use this formula to calculate CCC:

CCC = days sales outstanding + days inventory outstanding - days payable outstanding

Lower CCCs are ideal for businesses, as they indicate their cash won’t be stuck in inventory and accounts receivable for a long time.

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This process involves comparing and matching incoming payments with corresponding invoices or accounts receivable entries in the company's financial records.
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30-Day and 13-Week Operating Cash Burn
30-day and 13-week operating cash burn are also known as the “burn rate.” These are the rates at which a business consumes its cash reserves when it isn’t bringing in profit.