Cash Conversion Cycle adalah putaran kitar duit

Purchase ---------Finish Product--------Sell--------------------------------------------Collect Cash

(Raw Material) (Finish Goods) (Customer)

*jual secara hutang auto create acc receivable

Short term is better (lagi cepat kita kutip duit lagi cepatlah kita boleh pakai duit untuk next
production)

1.Inventory Conversion Period (ICP)

-This is the time taken for company to convert raw material into finish goods and then sell to the
customer.

-Formula = Average Inventory/COGs x 360 day

2.Average Collection Period

-Time taken to collect our acc receivable

-Formula = Acc Receivable/Annual Credit Sell x 360 days

3.Payable Deferral Period

-This is a average length of time the company takes to purchase form supplier and pay for them.

-Formula = Payable/COGS x 360 days

CCC = ICP + RCP - PDP

How to reduce
benda yang (+) kena kurangkan

benda yang (-) kita lamakan

Killa Bhd

CCC = ICP + RCP -PDP

=25 days + 32 days – 20 days
= 37 days

Annual Operating Cycle Investment = RM450,000

Daily Expenditure = RM450,000

360days
= RM 1,250

Reduction in financing = RM 1,250 x 10 days

= RM 12,500

Annual increase in profit = 7% x RM 12,500

= RM 875
ABC Bhd

CCC = ICP + RCP – PDP

= 70 days + 80 days – 30 days
= 120 days

Annual Operating Cycle Investment = RM2,000,000

Daily Expenditure = RM2,000,000

360 days
= RM5,555.56 x 120 days
= RM666,667.2

= 70 day + 80 days – 40 days

= 110 days

Reduction in financing = RM5,555.56 x 10 days

= RM55,555.6

Annual increase in profit = 10% x RM55,555.6

= RM5,555.56