Cash Conversion Cycle

The cash conversion cycle is the time it takes to convert investments in inventory and receivables into cash, net of payables.

It combines days inventory outstanding, days sales outstanding, and days payable outstanding to assess working capital efficiency.

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **Cash Conversion Cycle** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.