Cash Conversion Cycle (SM.CCC)
Cash Conversion Cycle (SM.CCC) of a company measures the time it takes to sell the inventory at hands, then to collect the receivables from customers, and how does that length of time compare to the period agreed with supplied to pay the bills (payables). This ratio helps assess the performance of a company at managing its working capital. It is calculated as the sum of Days Inventory Outstanding & Days Sales Outstanding less Days of Payable Outstanding.
It can be shown as- “Days Inventory Outstanding (SM.DSI) + Days Sales Outstanding (DSO) (SM.DSO) – Days Payable Outstanding (DPO) (SM.DPO)” .