Cash Conversion Cycle
Respond to the following in a minimum of 175 words:
The cash conversion cycle (CCC) is a metric that illustrates the amount of time it takes a firm to convert investments within their inventory into cash. The cash conversion cycle formula calculates the amount of time, in days, it takes for a company to turn its resource inputs into cash.
The cash conversion cycle formula is: CCC = DIO + DSO – DPO
Discuss the benefits the company stands to gain by accurately determining the cash conversion cycle (CCC).
Discuss how an increase in the DPO will impact the cash conversion cycle?