Cash Conversion Cycle Stages
Cash is the lifeblood of business. Managing the accumulation, flow and disbursement of cash is critical to the success of every business. How can your business become more efficient? By leveraging your operating cycle for optimal cash flow. At Fox Chase Bank, we can help measure your cash conversion cycle to identify opportunities for improvement. Our Cash Management Solutions team members are implementation specialists who can make it happen for your business.
 | How will shortening my business' cash conversion cycle affect my operations? |
 | The cash conversion cycle measures the length of time in days that your business' cash is tied up in its current operating cycle. It captures the interrelationship of your sales, collections and trade credit. The shorter your business' cash conversion cycle, the more efficient your company's operations and cash management functions will become. |
The business cash conversion cycle is measured in three stages:
To the extent that your company uses credit to finance accounts receivable, the length of the cycle time is diminished. All of the information needed to calculate your cash conversion cycle comes from your company's balance sheet and income statement.
