CI Market Dashboard

We have put together a collection of market indicators and track them to help you gauge the direction of the market.

CI Analysis Worksheets

Interactive analysis templates covering DuPont analysis (return on equity), valuing stocks the Warren Buffett way, and more to come.

CI Blog Feed

Bullish Sentiment Lowest in a Year
posted 3 days ago by Wayne Thorp

Mt. Gox Likely to Begin Liquidation Process
posted 4 days ago by Wayne Thorp

Intel’s Profit Declines Again Yet Shares Rise–What’s In Store for PCs?
posted 4 days ago by Joe Lan

Today Only: Google Glass for Sale
posted 5 days ago by Wayne Thorp

Report: Amazon Preps Smartphone
posted 6 days ago by Wayne Thorp

Computerized Investing > Second Quarter 2011

The Cash Conversion Cycle

PRINT | | | | COMMENTS (3) | A A   Reset

by CI Staff

Through the normal course of business, companies acquire inventory on credit, which they in turn use to create products. These products are then sold, oftentimes on credit. These actions generate accounts payable and accounts receivable, with no cash exchanged until the company collects accounts receivable and settles the accounts payable.

The cash conversion cycle (CCC) measures the time—in days—that it takes for a company to convert resource inputs into cash flows. In other words, the cash conversion cycle reflects the length of time it takes a company to sell inventory, collect receivables, and pay its bills. As a rule, the lower the number, the better. This is because, as the cash conversion cycle shortens, cash becomes free for a company to invest in new equipment or infrastructure or other activities to boost investment return. Also, the cash conversion cycle can be useful in comparing close competitors and assessing management efficiency.

...To continue reading this article you must be a Computerized Investing Subscriber.

Gain exclusive access to this article and all of the benefits and investment education a Computerized Investing subscription offers.

SUBSCRIBE TODAY for just $24.
Log in
Already a CI subscriber? Login to read the rest of this article.

A subscription to Computerized Investing includes a monthly email and access to the CI Website, all of which aim to benefit your investing skills with respect to computers and the Internet.