Measuring Cash‐to‐Cash Performance

Abstract

The cash‐to‐cash (C2C) metric has evolved as one of the first measurements bridging across the firm. Therefore, it is important for managers to understand how the C2C metric is calculated, as well as how a company should compare in its C2C performance. In this paper, we define C2C and how to calculate it. Then, we provide an analysis and summary of C2C in 2001 for 5,884 companies using median performance by industry. A typology is introduced to classify industry performance using a 2 x 2 x 2 matrix based on the three variables of the C2C metric: accounts payable, inventory, and accounts receivable. We also consider how performance has changed since 1986, identify the key drivers to this change, and describe which industries have experienced the greatest change in C2C performance. Finally, managerial implications and future research questions are offered.

Citation

Theodore Farris, M. and Hutchison, P.D. (2003), "Measuring Cash‐to‐Cash Performance", The International Journal of Logistics Management, Vol. 14 No. 2, pp. 83-92. https://doi.org/10.1108/09574090310806611