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The Cash Conversion Cycle (CCC) measures the total length of time (in days) it takes for a business to convert inventory and raw material investments into cash inflows from sales.
Cash Conversion Cycle tracks the journey of a cash rupee from purchasing raw materials, storing inventory, completing credit sales, to collecting receivables, minus supplier credit terms.
CCC is the ultimate benchmark of working capital velocity. A shorter cycle means higher capital efficiency, reducing reliance on external debt.
DIO = (Inventory ÷ COGS) × Days. DSO = (Receivables ÷ Credit Sales) × Days. DPO = (Payables ÷ COGS) × Days.
30 to 60 days across manufacturing & trading. Negative CCC indicates cash-and-carry strength.
MSMEs with short CCC require smaller bank cash-credit (CC) limits and generate higher Return on Capital Employed (ROCE).
Yes. E-commerce platforms and cash-and-carry supermarkets often have negative CCC because customers pay instantly while suppliers are paid on 30 to 60 day terms.