{"id":1776,"date":"2022-04-28T14:36:45","date_gmt":"2022-04-28T14:36:45","guid":{"rendered":"http:\/\/liquidcapitalcorp.com\/?p=1776"},"modified":"2022-05-04T17:28:18","modified_gmt":"2022-05-04T17:28:18","slug":"cash-conversion-cycle","status":"publish","type":"post","link":"https:\/\/liquidcapitalcorp.com\/es\/blog\/cash-conversion-cycle\/","title":{"rendered":"How to determine your company\u2019s \u201ccash conversion cycle\u201d"},"content":{"rendered":"

Part 1 in the Cash Cycle series: Learn the basics of a \u201ccash conversion cycle\u201d and how you can use it to your company\u2019s advantage.\u00a0<\/span><\/em><\/p>\n

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Reaching success and growth in business requires a healthy <\/span>cash flow<\/span><\/a>. This allows your business to be prepared for the unexpected challenges and growth opportunities that will come your way. For example, if you buy and sell inventory on account, it\u2019s critical that you know how long it takes to turn that inventory into cash.<\/span><\/p>\n

As a business owner, you want to make sure you have the money you need when you need it, and the very last thing you want to experience is cash flow issues that restrict business operations.\u00a0<\/span><\/p>\n

Understanding your cash conversion cycle (CCC) is key to ensuring you’re on top of your company’s working capital.<\/span><\/p>\n

Know your company\u2019s cash conversion cycle <\/strong>\u00a0<\/b><\/strong><\/h2>\n

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Your company\u2019s <\/span>cash conversion cycle<\/span><\/a> (CCC) tells you how many days it takes to turn your inventory purchases into cash. It\u2019s a cycle that is all too familiar: you acquire inventory from a supplier, store that inventory, sell it to a customer on account, pay your suppliers and collect on your invoices \u2014 thus getting paid and putting cash back into the company.<\/span><\/p>\n

The CCC is an important financial indicator of your company\u2019s cash flow. It shows your ability to maintain highly liquid assets and is a metric that <\/span>lenders<\/span><\/a> and other finance providers will use to assess your potential risk level.<\/span><\/p>\n

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Follow all six steps to becoming \u00ablender friendly\u00bb and get prepared to access funding from any lender.<\/a><\/em><\/span><\/p>\n

Access the complete eBook.<\/span><\/a><\/strong><\/span><\/p><\/blockquote>\n

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It\u2019s not magic, it\u2019s just math<\/strong><\/h2>\n

You don\u2019t need to be a magician to unlock the power of the CCC formula for your business. All you need are three figures to complete the basic CCC formula, all of which you can find in your financial statements.\u00a0<\/span><\/p>\n

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Let\u2019s look at each component a little more closely.<\/span><\/p>\n