Working Capital Cycle
The working capital cycle (WCC) is the amount of time it takes to turn the net Working Capital (WC) from one state to the other. In other words, it's a measure of a company's efficiency at converting its current assets and current liabilities into cash.
A company's WC consists of its short-term assets and liabilities, which are used to finance its day-to-day operations. The WCC is the time it takes to convert these assets and liabilities into cash
The WCC is a good way to measure a company's efficiency because it shows how quickly a company can generate cash from its operations. A company that has a shorter WCC is more efficient than a company with a longer WCC.
The WCC can also be used to assess a company's liquidity risk. A company with a longer WCC is more likely to have difficulty meeting its short-term obligations and is therefore riskier.
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