Question

State the relationship between the Cash Conversion Cycle (CCC) and the quantum of working capital required by a business.

Answer 1

Relationship between CCC and Quantum of Working Capital Needed:

1. A business's working capital requirements are directly affected by the CCC.
2. A company that has a shorter CCC needs less working capital because it can turn its resources into cash faster.
3. On the other hand, a longer CCC suggests that turning investments into cash takes longer, requiring more operating capital in order to keep everything running smoothly.