cash conversion cycle

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Cash conversion cycle

The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable.

Cash Conversion Cycle

The time between an expenditure of money to make a product and the collection of accounts receivable from the sale of that product. Obviously, a shorter cash conversion cycle is preferable. A longer cash conversion cycle may indicate a current or potential problem with cash flow.

cash conversion cycle

The time required for a business to turn purchases into cash receipts from customers. A short cycle allows a business to quickly acquire cash that can be used for additional purchases or debt repayment.
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The improvement is the result of continued profitability and the Companys focus on cash conversion cycles.
Kapital Boost also aims at helping SEMs grow by shortening their cash conversion cycles and by offering competitive rates coupled with a fast approval process versus other non-bank financing.
Firms experiencing a shorter time span of cash conversion cycle will be able to increase the profitability by managing its credit policy and increasing its inventory levels, while firms having a relatively large length of cash conversion cycles should focus on reducing the investment in the components of working capital.
Corporate Returns and Cash Conversion Cycles, Journal of Economics and Finance, 20, (1), 35-48.
Studies on this relationship have consistently found that more efficient cash conversion cycles lead to higher returns in both large firms (Lazaridis and Tryfonidis, 2006; Deloof, 2003; Wang, 2002; Shin and Soenen, 1998; Jose, Lancaster, and Stevens, 1996) and small firms (Garcia-Teurel and Martinez-Solano, 2007; Padachi, 2006).
By adding an ECM platform, you can improve effectiveness, increase productivity, and shorten cash conversion cycles.
The sections with short cash conversion cycles are: leather goods production (from minus 5 to 50 days), producing coke and oil products (from 14 to 32 days), producing cars and trailers (from 6 to 37 days) and processing waste (from 19 to 37 days).
Selectica enables world-leading companies to successfully improve their fundamentals, accelerate their cash conversion cycles, and re-channel revenue toward corporate goals.