Cash Conversion Efficiency
Calculate the cash conversion efficiency, an efficiency ratio that measures how efficiently a company converts its sales into cash. It is also known as the cash conversion ratio.
The cash conversion efficiency ratio is calculated by dividing the operating cash flow by the revenue. It indicates how much of a company’s sales are converted into cash. A higher cash conversion efficiency ratio is generally favorable, as it suggests that the company is able to convert its sales into cash more efficiently.
The formula is as follows:
\[\text{Cash Conversion Efficiency Ratio} = \text{Operating Cash Flow} / \text{Revenue}\]Also known as: CCE, cash efficiency ratio.
Cash Conversion Efficiency in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_cash_conversion_efficiency as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["ADBE", "CRM", "NOW"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_cash_conversion_efficiency()
Or, after setting up the Finance Toolkit MCP, ask:
What share of revenue did Adobe, Salesforce and ServiceNow turn into operating cash flow from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| ADBE | 0.458 | 0.4452 | 0.3762 | 0.3746 | 0.422 |
| CRM | 0.2265 | 0.2268 | 0.2936 | 0.3455 | 0.3611 |
| NOW | 0.3716 | 0.3758 | 0.3788 | 0.3885 | 0.41 |
Parameters
get_cash_conversion_efficiency accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |