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Definition
The cash conversion cycle (CCC) is the number of days between paying for stock and receiving cash from the sale it produces. It equals days inventory outstanding plus days sales outstanding minus days payable outstanding — the net time your cash is tied up in trading.
In plain terms
If stock sits 30 days, customers pay in 45, and you pay suppliers in 30, your cash is tied up for 45 days (30 + 45 − 30). Shorten any leg and the whole cycle shortens, releasing working capital.
Why it matters
The CCC is the single clearest measure of how efficiently a business turns activity into cash. A shorter cycle frees cash; a lengthening one drains it. See the cash conversion cycle guide and how to shorten it.
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