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simply its the time taken to convert the outflow into inflow of cash
The Cash conversion cycle, also called the net operating cycle, is the number of days it takes a company to generate revenue with assets.
The cash conversion cycle involves determining how long it takes to create inventory, sell inventory and collect on invoices to customers.
Average time taken by a company to convert its (input) outflow of cash into (Output) Inflow of cash i.e the time taken between paying ur suppliers to recieving cash from your customers.
Its interesting to mention here that some companies receive cash in advance from their customers on Bookings and have supplier payment times of months and months hence they have a negative cashflow cycle.
a simple formula is = Days (invenotry outstanding + sales outstanding - payable outstanding)
The Cash conversion cycle, also called the net operating cycle, is the number of days it takes a company to generate revenue with assets
