Cash Conversion Cycle is a measure of how healthy the cash flow position of a business is. The Cash Conversion Cycle metric basically measures the length of time it takes to convert its goods and services into actual cashflow.
Where:
DIO represents DAYS INVENTORY OUTSTANDING
DSO represents DAYS SALES OUTSTANDING
DPO represents DAYS PAYABLE OUTSTANDING
CCC = DIO + DSO - DPO
This indicator will be included in my book: Key Performance Indicators - the 100 measures every manager needs to know, which contains an in-depth description of this KPI, as well as practical advice on data collection, calculations, target setting, and actual usage.