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What one might look for, if anything, on the Statement of Cash Flows to indicate good...

What one might look for, if anything, on the Statement of Cash Flows to indicate good CCC management?

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Answer #1

The cash conversion cycle measures the efficiency with which the working capital of a business is managed. It measures the length of time between a company's purchase of inventory and the receipts of cash from its accounts receivable aslongwith the duration of payment to suppliers.

Cash conversion cycle = days inventory outstanding + days sales outstanding - days payable outstanding

It cannot be directly observed in the Statement of cash flows. The amount of cash received from receivables and paid to payables however can be used to judge the CCC in the direct cash flow statement. This can also be comprehended as increase or decrease in inventory, receivables and payables in the indirect cash flow statement.

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