What is the cash conversion cycle? Why does it matter?

The cash conversion cycle is a unique metric that measures how long it takes for a company to convert its inventory into cash. Obviously, the smaller this number, the better. The cash conversion cycle has three components: inventory days, receivable days and payable days. Inventory days measure the number of days it takes for the company to sell its inventory. Receivable days measure how many days it takes for a company to receive cash from the sales. And payable days measure how many days of credit a company gets f

This article was originally published on March 28, 2022.