Cash Conversion Cycle

I. Formal Definition

The number of days that elapse between an organisation paying its suppliers for inventory or services and collecting cash from its customers, computed as days inventory outstanding plus days sales outstanding minus days payables outstanding. The cash conversion cycle is the working capital efficiency measure and is the relevant indicator for the magnitude of working capital required to fund operations. The federation requires cash conversion cycle to be reported quarterly for any organisation with material inventory or trade receivables, with each component disclosed under MEV-Annex:4.1.

II. Etymology

A coinage of mid twentieth century operations management literature; the construction stabilised in supply chain and treasury management vocabulary by the 1980s.

III. Federation Usage

Federation members publish cash conversion cycle quarterly with DIO, DSO, and DPO components. Material movement in any component is footnoted with the underlying driver. The cycle is used as an input to working capital adequacy assessment under MEV-Annex:4.1.

IV. Related Terms

• working-capital
• cash-position
• accounts-receivable
• accounts-payable

V. Authoritative Citations

• UFMS-001:3.1UFMS Article III - Working Capital
• MEV-Annex:4.1MEV Annex IV - CCC Reporting

VI. Citation in BibTeX

@misc{ifo4_glossary_cash_conversion_cycle,
  title        = {{Cash Conversion Cycle}},
  author       = {{IFO4 Federation Editorial Board}},
  howpublished = {{IFO4 Federation Glossary, slug \texttt{cash-conversion-cycle}}},
  year         = {2026},
  url          = {https://ifo4.org/glossary/cash-conversion-cycle},
  note         = {Category: Capital; key: CashConversionCycle}
}

VII. Challenge This Definition

Federation members and accredited practitioners may challenge any entry under TGS-002:1.7. Filed challenges are routed to the editorial board, triaged into the revision register, and resolved in writing on the public docket. The slug remains stable through any revision.