The Cash Conversion Cycle (CCC) measures the number of days a company's cash is tied up in operations — calculated as Days Inventory Outstanding + Days Sales Outstanding – Days Payable Outstanding. A retailer holding 60 days of inventory, collecting receivables in 30 days, and paying suppliers in 45 days has a 45-day CCC. Lower CCC = better cash efficiency. Negative CCC (Amazon, Dell historically) means suppliers fund operations. Reducing CCC frees cash for growth without external financing. CCC trends reveal operational improvements or deterioration. Manufacturers and retailers face longer CCCs; software businesses (no inventory) have shorter CCCs.
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CAC
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Cash Conversion Cycle
August 22, 2026 · Aditya Gupta
Corporate Finance
Related terms
ARR
Annual Recurring Revenue (ARR) is the annualized value of subscription contracts — the standard metric for SaaS businesses.…
Break-Even Point
Break-even point is the level of sales where total revenue equals total costs — zero profit, zero loss.…
Budget vs Actual
Budget vs Actual (BvA) variance analysis compares budgeted financial performance to actual results, identifying gaps and their drivers.…
Burn Multiple
Burn Multiple is a venture capital metric: Net Cash Burn / Net New ARR — measuring how efficiently…
Burn Rate
Burn rate is the rate at which a startup spends cash beyond what it generates from operations, expressed…
CAC
Customer Acquisition Cost (CAC) is total sales and marketing spend divided by new customers acquired in a period.…
