Cash Conversion Cycle
Time from cash outlay for materials to cash receipt from sales.
Formula
CCC = Inventory Days + Receivables Days − Payables Days
Real World
Amazon has famously achieved a negative CCC — customers pay before Amazon pays its suppliers — meaning it effectively operates using suppliers' money to fund growth.
Exam Focus
For 'analyse' questions, always link a shorter CCC directly to reduced cash needs and improved liquidity.
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