How To Calculate The Cash Conversion Cycle | And What It Means

Cash Conversion Cycle is the length of time it takes a company to complete the sale cycle, from the production of finished goods through paying off its suppliers. I break it all down in this video.

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[alangerardohurta]

The best accounting teacher and helping professionals and students by explaining in a simple and clear way.

[webby]

Best teacher on accounting. Simple and straightforward.

[jolly]

This is great!! Love when accounting is simplified, makes it fun to learn. Thank you!

[thierryyapi]

You are an excellent accounting and finance teacher. You should definitely think about starting your own CPA or CMA review course. I can guarantee you will have no problems enrolling aspiring CPA and CMA candidates. Good luck Sir.

[TucsonArizona]

Thanks for sharing! I didn’t know much about this topic until watching this video so I learned a lot! Keep this content coming! I’m following!

[hazemmahmoud]

First ... Thank you for all videos
Second .. You forget to mention when We dividing an account from balance sheet with an account from income statement ..We use an average for balance sheet account

[hackit]

Brilliantly explained. 👏 Again you make it so simple to understand. Thank you 😊.

[evansjuma]

This is super, you have brought out the concept in a very simple way.
Many thanks 😊

[jenncote]

Thank you for this video. How would you calculate the cash conversion cycle for a company in the service industry where there is no inventory and only wages.

[ishtaiqmalik]

DPO Sir only i want to ask that we read the formula that AP/Net credit purchase & you used the cost of goods sold. which one is correct, could you explain?

[rabihjamaleddine]

Congrats for your style of explanation

[oneildacres]

Great Info! Explained easily with good examples.

[MrCosmos]

Thank you very much for the explanation. I still have a question, where to get the information about all these numbers (dio, dso etc.)?

[mailinhtrinh]

If it has purchases expense and COGS which price should I divide to calculate DPO

[Mirakia]

I know this will probably depend heavily on the specific industry, but what are some metrics that can be tracked/analyzed to help depict the financial health of a service based business that does not sell inventory and does not offer credit sales❓

[Avening]

Just to confirm. When you are calculating the DIO, you should take the inventory of a full-year divided by the avg. Costs of sales of the year? Or, you take both numbers of one specific period?
Same with the others KPIS.

Thanks!!

[stilesinvestmentsllc]

But Bill glossed over how to calculate the net credit sales from the financial statements. I tried to figure out these numbers for TXN for 12/31/22, and got: DIO: 161, DSO: 369, DPO: 50, and CCC:480. I have no idea if my DSO calculation is correct. In his Balance Sheet Cheat Sheet, Bill describes the DSO calculation as "AR / Credit Sales * # of days in period" and gives an example of "2, 000, 000 / 2, 000, 000 * 31" but did not explain where the second "2, 000, 000" came from.

[kiranh]

Hi Bill, With regards to DIO calculation, should we consider Finished Goods ?

[larahporter]

This was an excellent video. I have a degree in BA and Accntg and this lesson was on point. Why professors take 3 hours to explain this?! 🤣

[rogerloydmccoy]

Can this be calculated on different intervals such as monthly by month within a the year?