Cash Conversion Cycle
Time from cash outlay for materials to cash receipt from sales.
Formula
Inventory Days + Receivables Days − Payables Days
Real World
Amazon achieves a negative cash conversion cycle — customers pay before Amazon pays its suppliers — meaning it effectively uses supplier credit to fund operations with minimal cash tied up.
Exam Focus
A shorter or negative CCC is better; always explain the direction of change, not just the number.
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