Accounting - The cash cycle
The cash cycle
The cash cycle measures the time it takes to buy and sell stock, collect
money from debtors and return that money to the business. To complete the
measurement the time allowed by creditors to pay is deducted.
For instance, if stock turnover is 65 days and debtors turnover is
40 days this adds to 105 days. If creditors turnover is 30 days then the
cash cycle is said to be 75 days.
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