Cash Conversion Cycle
Calculate the Cash Conversion Cycle, which measures the amount of time it takes for a company to convert its investments in inventory and accounts receivable into cash, while considering the time it takes to pay its accounts payable. This ratio is also known as Cash-to-Cash Cycle (C2C) or Net Operating Cycle.
The Cash Conversion Cycle (CCC) is an important measure of a company’s liquidity management and efficiency in managing its working capital. It takes into account the time it takes to sell inventory, collect payments from customers, and pay suppliers. A shorter CCC indicates that a company is able to quickly convert its investments into cash, which can be a positive sign of efficient operations.
The formula is as follows:
\[\text{Cash Conversion Cycle} = \text{Days of Sales in Inventory} + \text{Days of Sales Outstanding} - \text{Days of Accounts Payable Outstanding}\]Also known as: CCC.
Cash Conversion Cycle in Python
get_cash_conversion_cycle is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_cash_conversion_cycle as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
ccc_values = toolkit.ratios.get_cash_conversion_cycle()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | -52.8985 | -62.435 | -70.9225 | -72.9716 | -71.8218 |
| TSLA | -15.3351 | -9.2271 | 4.7523 | 11.9367 | 13.9381 |
Parameters
get_cash_conversion_cycle accepts the following parameters:
- days (int, optional): The number of days to use for the calculation. Defaults to 365.
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.