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Key Performance Indicators (KPI) by Bernard Marr

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14

Cash conversion cycle (CCC)

Strategic perspective

Financial perspective

Key performance question this indicator helps to answer

How well are we doing at maintaining a healthy cash position?

Why is this indicator important?

A main reason why companies get into difficulties is not necessarily a lack of sales but the company running out of money in the bank (cash) to pay for the day-to-day costs of the business. An old business saying is that ‘cash is king’. With this recognition, a number of KPIs have been developed to assess a company’s cash position, generally known as ‘cash flow’. The cash conversion cycle (CCC) is such a measure.

The CCC metric assesses the length of time, in days, that it takes for an organisation to convert resource ...

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