Cash-to-cash conversion time is a key performance metric that measures the efficiency of a company's cash flow cycle:
Material Acquisition to Sales: It starts from the time cash is spent to acquire raw materials and ends when the company receives payment for the finished goods.
Inventory Management: Efficient inventory management reduces the time materials sit as inventory, speeding up the conversion cycle.
Production Efficiency: Streamlining production processes shortens the time products are manufactured and ready for sale.
Receivables Management: Effective receivables management ensures quick collection of payments, reducing the overall cash-to-cash cycle time.
References:
Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. J. (2016). Supply Chain Management: A Logistics Perspective. Cengage Learning.
Lambert, D. M., & Cooper, M. C. (2000). Issues in Supply Chain Management. Industrial Marketing Management, 29(1), 65-83.
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