Chapter 12
Cash conversion cycle (CCC)
- Why: To better understand your financial performance, especially the way cash flow is managed
- What: Measure the time it takes from spending money on producing goods or services to money coming back into the business
- When: When you want to assess how well a company manages its cash flow
- The question this indicator helps you to answer: how well are we doing at maintaining a healthy cash position?
Why does this KPI matter?
A main reason why companies get into difficulties is not necessarily a lack of sales but the company running out of money in the bank (cash) to pay for the day-to-day costs of the business. An old business saying is that ‘cash is king’. With this recognition, a number of KPIs have been ...
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