Investing Basics - Feel free to ask the most basic questions

Cash conversion cycle-CCC

Days inventory outstanding PLUS Days sales outstanding MINUS days purchase outstanding
Summation of payables, receivables and inventory. How effectively management is using one account against other. Example if I collect late then I can pay late and improve my liquidity. Or if I have sales return I send them back to vendor if I can.

Few points:

If a company does not deal with inventory it becomes a comparison of purchase and sales. But issue happens say like IT companies where purchase is not significant cost rather its human cost.
CCC period against gross margin should be healthy. More sensitive if you have cash credit or loan against working capital.
Improved CCC on vendor strength could be temporary, consistency is important to demonstrate.
CCC you can define also as TIME FOR INFLOWS MINUS TIME TO OUTFLOWS
Note- you can read details further on internet. Not trying to repeat academic stuffs a lot here other than bare necessity.

I suggest read whole post and let me know questions if any.