Weekly KPI: CASH CONVERSION CYCLE (CCC)
WHAT IS IT?
Measures the time (in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
WHY IS IT IMPORTANT?
CCC indicates how efficiently a company is using short-term assets and liabilities to generate and redeploy cash, offering a glimpse into the company’s financial health with respect to cash flow management. The shorter the cycle, the less time capital is tied up in the business process.
HOW DO YOU CALCULATE IT?
Days Inventory Outstanding + Days Sales Outstanding – Days Payable Outstanding
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ABOUT OMEGA ACCOUNTING
Omega Accounting Solutions is an accounting and data firm that empowers small businesses to make informed business decisions through the production of accurate and timely books that yield insightful and actionable reports. The Irvine, Calif., firm founded by Jay Woods in 2007 works with CFOs, controllers, accountants and software developers to collect, integrate, analyze and present essential data that allow for healthy corporate operation and growth. In 2016, Omega launched a Business Intelligence Division to provide firms with customized programs, KPIs and continuously refreshed dashboards that allow them to connect data silos and take advantage of real-time opportunities in the marketplace. Read more about Omega Accounting