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Turning product into cash as rapidly as possible is a business basic. But how long does it take right now?
As the maxim has it: “Revenue is vanity, profit is sanity, but cash is king.” That’s why it’s vital not to have money tied up for too long in inventory that’s sitting in a warehouse. The faster you can sell your product and collect your payments, the shorter your “cash conversion cycle” (CCC). Factors such as higher demand and efficient internal processes all therefore shorten the CCC. And a low CCC is a sign of a company on the front foot: Having greater liquidity means the business is better placed to meet financial obligations, absorb shocks and invest in growth.
So, how has the recent cocktail of global events—the pandemic, the downturn, the war in Ukraine— impacted the average S&P 1500 company’s CCC? We visualized data from J.P. Morgan’s Working Capital Index Reports to find out...
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ILLUSTRATION: MANUEL BORTOLETTI
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