This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
Calculation: CCC = DIO + DSO - DPO
Example: The Round Number CompanyThe values are calculated for each term under their individual listings. DIO = Days Inventory Outstanding = 227 Days DSO = Days Sales Outstanding (DSO)= 73 Days DPO = Days Payable Outstanding = 91 Days Cash Conversion Cycle = 227 + 73 - 91 = 209 Days |
This metric takes into account how much time the company needs to sell its Inventory, how much time it takes to collect Receivables, and how much time it has to pay its bills (Payables). A lower number is preferred.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.