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What is the aim of studying cash conversion cycle and its calculation?

The aim of studying cash conversion cycle and its calculation is to change the policies relating to credit purchase and credit sales. The standard of payment of credit purchase or getting cash from debtors can be changed on the basis of reports of cash conversion cycle. If it tells good cash liquidity position, past credit policies can be maintained. Its aim is also to study cash flow of business. Cash flow statement and cash conversion cycle study will be helpful for cash flow analysis.

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Question ajoutée par Nadia Ahmed Mohammed Saeed , T/L. Credi t& Risk , Canar Telecommunication Co. LTD.
Date de publication: 2013/08/26
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Aziz ur Rehman ur Rehman
par Aziz ur Rehman ur Rehman , Assistant Manager Finance , Central Power Puchasing Agency (CPPA)

The aim of  cash conversion cycle lies in its dormula.
the formula describe that the how much amount  must be collected trhough inventory deployed and sufficient to pay the creditors.
it also aware us about the over all liquidity position of firm/company.
in this way we can focus about the cash dump in current assets  or over payment to the creditors with the availing the opportunity to utlize the cash Formula Cash Cycle= sum of collection or conversion Periods of current Assets - sum of payment  period to current liabilites.
  Aziz ur Rehman skype azize1130     

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