Cash Quality

What is Cash Conversion Cycle?

How many days cash is tied up between paying suppliers and collecting from customers. Negative means customers pay before suppliers are paid.

How it is calculated

Days sales outstanding plus days inventory minus days payable.

How to read it

Shorter is better. A negative cycle, as at Apple, means the business is financed by its own suppliers and customers.

Where the numbers come from

Scrutar computes Cash Conversion Cycle from the figures each company reports to the SEC in its annual and quarterly filings, using the XBRL data attached to those filings.

More Cash Quality metrics

FCF MarginThe share of revenue that becomes free cash.How to read it →FCF / Net IncomeHow much of reported profit shows up as free cash. Sometimes called cash conversion.How to read it →Capex / D&AWhether the company is investing more in its assets than they wear out.How to read it →SBC / RevenueStock compensation as a share of sales, a measure of how much of the business is being paid to employees in shares.How to read it →Accruals RatioThe gap between accounting profit and cash profit, relative to the size of the company. High accruals often precede disappointing earnings.How to read it →Days Sales OutstandingHow many days, on average, the company waits to collect cash after a sale.How to read it →Days InventoryHow many days of sales are sitting in inventory.How to read it →Days PayableHow many days the company takes to pay its suppliers.How to read it →

See it for a real company

Ten years of Cash Conversion Cycle and every other metric on this page, for every company Scrutar covers, computed from SEC filings.

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