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The Implication of Cash Conversion Cycle on Liquidity

concept Apr 18, 2019
 

 By Puah Soon Lim

Today’s post is going to be about a question that I receive from one of my student at the recent weekend class at the SGX Academy. It concerns the CCC and its impact on a company’s liquidity. Specifically, this is the question that she asked:

“My calculations of the cash conversion cycle for Coy A is 179 days and for Coy B is (-74 days).  Does a negative number indicate more liquidity? In this case, is Coy B more liquid than A?”

She did a calculation for CCC and for Company A, it is 179 days and for company B, it is a negative 74 days. She asked “Does a negative number indicate more liquidity?  In this case, is Coy B more liquid than A?”

 

I feel that this is a good question to answer and I am going to answer it in this blog post. You may also write to us at this address and if we feel that this is a good question to answer, I will feature it in my blog post.

Just to give all of you a heads up, I have given two...

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