The days a business funds its operations between paying suppliers and collecting from customers.
Ciclo = Días de inventario + Días de cobro − Días de pago
What each letter means
- Di: Inventory days
- Dc: Collection days
- Dp: Payment days
An example
With Di = 50 days, Dc = 35 days, Dp = 40 days: Cash conversion cycle = 45 days.