Business Intelligence in 60 seconds - Indicators and KPIs - Cash Conversion Cycle
- Up Journey Partners
- Mar 9
- 1 min read
BI in 60 seconds is a series of posts dedicated to providing very quick BI insights, but with high and immediate applicability.
The question :
If we are selling well, why are we having difficulty meeting our main treasury obligations?
Key point:
How long does it take our customers, on average, to pay?
How long does it take us, on average, to pay our suppliers?
How long does the product remain in storage before being sold?
In short, where is our money?
Common error
Looking at each of these indicators independently without conducting an integrated analysis that allows for an understanding of the company's financial cycle.
Do not consider this indicator as an essential basis for projecting company growth.
Road to #profit
Calculating each indicator correctly and analyzing them together allows you to understand exactly where the company stands and build a sustainable liquidity strategy.
Cash Conversion Cycle
It measures the average number of days between payment to suppliers and receipt from customers:
CCC = PMR + DMI - PMP
PMR - Average Collection Period
DMI - Average Days dm Inventory
PMP - Average Payment Period
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