Cash Conversion Cycle

The Cash Conversion Cycle (CCC) measures how many days it takes a company to turn cash spent on inventory into cash collected from customers. It’s calculated as Days Inventory Outstanding plus Days Sales Outstanding, minus Days Payable Outstanding: how long stock sits, how long customers take to pay, minus how long the company takes to pay its own suppliers.

A shorter cycle means cash is tied up for less time; a lengthening one is often the earliest sign of a working capital problem, well before it shows up in the cash balance. See our glossary of working capital metrics for the components that feed it.