The cash conversion cycle depends upon the time it takes to sell merchandise inventory, to collect receivables and to pay payables.

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The cash conversion cycle (CCC) is calculated as the sum of inventory conversion period (ICP), accounts receivable conversion period (ARCP), and accounts payable conversion period (APCP). It represents the time it takes for a company to convert its investment in inventory and accounts receivables into cash. Therefore, it depends upon the time it takes to sell merchandise inventory, to collect receivables, and to pay payables.

The Cash Conversion Cycle Depends Upon the Time It Takes