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Cash conversion cycle is the number of days it takes a company to convert its investment in inventory to cash. In short, it is a combination of following ratios:
Formula for calculation is ITO+RTO-PTO. This should always be used in conjuction with in dept analysis of all the ratios involved as there is a possibility that a conversion cycle can give a distorted view due to extra ordinary fluctuation in any of the ratios.
Hope this answers your query.
