What is Cash Conversion Cycle?
The cash conversion cycle (CCC) measures the days it takes a company to convert investments in inventory and other resources into cash from sales. It equals DSO + DIO – DPO.
How It Works
- Compute days inventory outstanding (DIO).
- Add days sales outstanding (DSO).
- Subtract days payable outstanding (DPO).
Saudi Context
Saudi distributors and retailers monitor CCC closely to manage SAR working capital around Ramadan, Hajj seasonality, and ZATCA-driven invoicing cycles.
Example
A Saudi distributor with DIO 40, DSO 60, DPO 45 has a CCC of 55 days.