Investing

The gross profit margin compares the difference between the revenue and cost of goods sold, against revenue. It is represented in the form of a percentage and is used to evaluate the company’s financial health.

The amount of time it takes a firm to convert its inventory into cash is known as the cash conversion cycle. In other words, it is the time taken for firms to convert their resources into cash.

The period of time a firm takes to pay back their suppliers or creditors for their material purchases is known as payable deferral.

The receivable collection period is a period when a firm receives the amount owed by their customers.

The inventory conversion period is the timeframe that encompasses the process of obtaining the raw materials, manufacturing, to selling the product. It helps the firms estimate the timespan between the day raw materials are bought to the day the product is sold.