Definition
The time between paying suppliers and collecting from customers, measured in days. Negative is magical—you get paid before paying bills, turning working capital into a profit center. Positive means you're funding your customers' purchases with your own money.
Example Usage
Dell's negative cash conversion cycle meant customers paid for computers before Dell paid suppliers, essentially making working capital free.
Origin
Developed as a working capital management metric in the late 20th century.
Fun Fact
Amazon perfected the negative cash conversion cycle, getting paid for books before paying publishers—basically running a bookstore with other people's money.
Source: Working capital management terminology
Related Terms
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