Cash conversion cycle

Accounting
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In management accounting, the Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in inventory in order to expand customer sales.^[1] It is thus a measure of the liquidity risk entailed by growth.^[2] However, shortening the CCC creates its own risks: while a firm could even achieve a negative CCC by collecting from customers before paying suppliers, a policy of strict collections and lax payments is not always sustainable.^[3]

^ Cash Conversion Cycle (Operating Cycle)
^ Cash and Working Capital Management Archived October 29, 2013, at the Wayback Machine
^ "10 Top Financial Challenges for Small Businesses and How to Overcome Them". netSuite.com.

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Cash conversion cycle

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