I The cash conversion cycle shows that an organization is able to convert its assets or resources into cash flow more rapidly, which can be effective for its financial performance. A higher time of cash conversion cycle means that the organization is facing difficulty in handling its working capital.
Cash Conversion Cycle Calculator in Excel
Use this calculator to find the cash conversion cycle (CCC) of an organization. Please input the desired values in the form below:
Cash Conversion Cycle Formula
Cash Conversion Cycle = Days of Accounts Receivable + Days of Inventory in Hand – Day of Accounts Payable
Cash Conversion Cycle negative
A negative cash conversion cycle can be advantageous for a firm’s financial performance as it indicates that it has more availability of cash for working capital and other financial purposes. However, it might also express that the firm is deferring payments to suppliers which could adversely affect supplier relationship management.
It is noteworthy for management to control the CCC cautiously in order to meet the liabilities in a timely manner.