 The cash conversion cycle is basically how long it takes a company to go from cash to even more cash, hopefully. It uses information already calculated with the inventory turnover ratio, the days sales and receivable, and the days payable outstanding. If you have any questions about those ratios, I would encourage you to go watch the short videos on those topics. The cash conversion cycle is a measure of efficiency, but it also measures liquidity. The formula is days inventory outstanding, which is sometimes called days sales and inventory, and is a variant of inventory turnover ratio, plus the days sales outstanding, which is sometimes called the days sales and receivable, minus days payable outstanding. So using data already calculated from prior ratios, this sample company has a cash conversion cycle of 25 days, which impacts liquidity because it takes about 25 days to go from cash to more cash. But it also impacts efficiency because most of the cash is tied up with inventory. Please note that it's possible to have a negative cash conversion cycle, which is really a positive for cash flows.