Cash Conversion Cycle: How Supplier Terms Affect Cash Flow
Summary
Hollow Point Trading shares a short explainer on how supplier payment timing affects the cash conversion cycle. It illustrates the calculation using 50 inventory days and 30 receivable days, showing why payable days matter when estimating how long cash remains tied up in operations.
https://youtu.be/TJmX6kBlnuo
Supplier payment timing changes the cash conversion cycle #Shorts
Profit margin does not tell you how long cash stays tied up in operations. A simplified cash conversion cycle adds inventory days and receivable days, then subtracts payable days. It estimates the timing between paying suppliers and collecting sales cash. Imagine inventory lasts fifty days, customers pay thirty days after sale, and suppliers are...
