Quick Finance Tip - Cash Conversion Cycle

Cash Conversion Cycle is a liquidity ratio determined by three activity ratios, being DSI, DSO, and DPO. It helps determine the days in which a company can convert resources into cash flows. This is done through measuring inventory via DSI, Receivables via DSO, and Payables via DPO. 

Cash Conversion Cycle = 
Days Sales of Inventory (DSI) +Days Sales Outstanding (DSO) - ​Days Payable Outstanding (DPO)