Cash conversion cycle
#31GUIDING QUESTION
How many days do you need to finance the cycle?
DIO + DSO − DPO (cash conversion cycle).
01.What it is
From buying to getting paid, adjusted for the payment term to suppliers.
02.Component masses
- DIO
- DSO
- DPO
03.Formula
MAIN FORMULA
Cash conversion cycle: DIO + DSO − DPO(days)
04.Related to
- Working capital
- Liquidity
- Turnover ratios