In management accounting, the cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in resources in order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth. However, shortening the CCC creates its own risks: while a firm could even achieve a negative CCC by collecting from customers before paying suppliers, a policy of strict collections and lax payments is not always sustainable.
Other articles related to "cash conversion cycle, cash":
... Our aim of studying cash conversion cycle and its calculation is to change the policies relating to credit purchase and credit sales ... We can change our standard of payment of credit purchase or getting cash from our debtors on the basis of reports of cash conversion cycle ... If it tells good cash liquidity position, we can maintain our past credit policies ...
Famous quotes containing the words cycle, cash and/or conversion:
“Only mediocrities progress. An artist revolves in a cycle of masterpieces, the first of which is no less perfect than the last.”
—Oscar Wilde (18541900)
“If when a businessman speaks of minority employment, or air pollution, or poverty, he speaks in the language of a certified public accountant analyzing a corporate balance sheet, who is to know that he understands the human problems behind the statistical ones? If the businessman would stop talking like a computer printout or a page from the corporate annual report, other people would stop thinking he had a cash register for a heart. It is as simple as thatbut that isnt simple.”
—Louis B. Lundborg (19061981)
“The conversion of a savage to Christianity is the conversion of Christianity to savagery.”
—George Bernard Shaw (18561950)