meaning of Cash-to-cash Cycle

Cash-to-cash Cycle meaning in Finance Dictionary

A financial proportion showing for the length of time a business needs to finance a unique stock/inventory. It steps the amount of times involving the preliminary money outflow (whenever company will pay its suppliers) towards the time it obtains cash from the consumers and it is calculated as: stock times + debtor days - creditor times. So a company which keeps its stock for typically of 20 times, which gets compensated by its debtors on average within 1 month and which will pay its creditors normally within 45 times, features a cash-to-cash period of 5 times. Businesses that get cash from their clients during the time of purchase hence have actually their stock under great control, has a brief cash-to-cash period.