Example for Cash Conversion Cycle

We'll be again using Hawkins Cookers Annual Report for the understanding of Cash Conversion Cycle practically, the link for which is provided below.
http://equitysection.proboards.com/index....hread=5&post=9

As we know Cash Conversion Cycle has three components - Days Inventory Outstanding, Days Sales Outstanding and Days Payable Outstanding.

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EQUITY SECTION An Indian Stock Investment Forum - News Reel

Update on Educomp Solutions Income Tax raid.

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Cash Conversion Cycle

One important tool to help us better understand the dynamics of Working Capital is Cash Conversion Cycle (CCC).

Cash Conversion Cycle (CCC) tells us about the time duration in which -

1. the inventory is consumed & processed into finished products and sold to customers,

2. the sales proceeds from the products is brought in from the customers or Sundry Debtors, and

3. the money is paid to the suppliers or Current Liabilities are paid.

Overall, Cash Conversion Cycle tells us how quickly money generated by the business or Net Profits is brought into the company after paying all its dues and liabilities. The shorter the cycle, the better it is. It also indicates as to how efficiently the working capital is being managed, meaning, whether the company is able to get longer credit periods from its suppliers and is able to quickly draw in money from its customers.

Cash Conversion Cycle has three components - Days Inventory Outstanding, Days Sales Outstanding and Days Payable Outstanding.

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Understanding Working Capital

Net Current Assets and Working Capital are one and the same thing. We know that Working Capital is the difference of Current Assets and Current Liabilities. Current Assets include Inventories, Sundry Debtors, Cash & Bank Balances and Loans & Advances. Current Liabilities include Liabilities and Provisions.

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EQUITY SECTION An Indian Stock Investment Forum - Balance Sheet, Profit & Loss, Cash Flow Statement

EQUITY SECTION An Indian Stock Investment Forum - Balance Sheet, Profit & Loss, Cash Flow Statement