The Cash Conversion Cycle (CCC) is a key metric that determines the efficiency of a company's management of its working capital. The formula for calculating the Cash Conversion Cycle is:

CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO)

Here's a step-by-step breakdown:

1. Days Inventory Outstanding (DIO): This is the average number of days that a company holds its inventory before selling it. The formula for DIO is: (Inventory/Cost of Goods Sold) x 365.

2. Days Sales Outstanding (DSO): This is the average number of days that a company takes to collect revenue after a sale has been made. The formula for DSO is: (Accounts Receivable/Total Credit Sales) x 365.

3. Days Payable Outstanding (DPO): This is the average number of days it takes a company to pay its bills to its trade creditors. The formula for DPO is: (Accounts Payable/Cost of Goods Sold) x 365.

By adding DIO and DSO and then subtracting DPO, you can calculate the Cash Conversion Cycle. This metric gives you an idea of how long a firm's cash is tied up in inventory and accounts receivable before it is converted back into cash through sales to customers.

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The Cash Conversion Cycle (CCC) is a key metric that determines the efficiency of a company's management of its working capital. The formula for calculating the Cash Conversion Cycle is:

CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO)

Here's a step-by-step breakdown:

1. Days Inventory Outstanding (DIO): This is the average number of days that a company holds its inventory before selling it. The formula for DIO is: (Inventory/Cost of Goods Sold) x 365.

2. Days Sales Outstanding (DSO): This is the average number of days that a company takes to collect revenue after a sale has been made. The formula for DSO is: (Accounts Receivable/Total Credit Sales) x 365.

3. Days Payable Outstanding (DPO): This is the average number of days it takes a company to pay its bills to its trade creditors. The formula for DPO is: (Accounts Payable/Cost of Goods Sold) x 365.

By adding DIO and DSO and then subtracting DPO, you can calculate the Cash Conversion Cycle. This metric gives you an idea of how long a firm's cash is tied up in inventory and accounts receivable before it is converted back into cash through sales to customers.

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The Cash Conversion Cycle (CCC) is a key metric that determines the efficiency of a company's management of its working capital. The formula for calculating the Cash Conversion Cycle is:

CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO)

Here's a step-by-step breakdown:

1. Days Inventory Outstanding (DIO): This is the average number of days that a company holds its inventory before selling it. The formula for DIO is: (Inventory/Cost of Goods Sold) x 365.

2. Days Sales Outstanding (DSO): This is the average number of days that a company takes to collect revenue after a sale has been made. The formula for DSO is: (Accounts Receivable/Total Credit Sales) x 365.

3. Days Payable Outstanding (DPO): This is the average number of days it takes a company to pay its bills to its trade creditors. The formula for DPO is: (Accounts Payable/Cost of Goods Sold) x 365.

By adding DIO and DSO and then subtracting DPO, you can calculate the Cash Conversion Cycle. This metric gives you an idea of how long a firm's cash is tied up in inventory and accounts receivable before it is converted back into cash through sales to customers.

What is the correct formula for Cash Conversion Cycle?

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