Cash Conversion Cycle

A key source of our liquidity is our ability to invest in inventory, sell the inventory to our customers, collect cash from our customers and pay our suppliers. We refer to this as the cash conversion cycle. The cash conversion cycle is measured by the number of days it takes to effect the cycle of investing in inventory, selling the inventory, paying suppliers and collecting cash from customers. The components in the cash conversion cycle are days sales outstanding in accounts receivable, days inventory on hand, and days payables outstanding. The cash conversion cycle, as we measure it, is the netting of days sales outstanding in accounts receivable and days inventory on hand with the days of payable outstanding. Circumstances when the cash conversion cycle decreases generally generate cash for the Company. Conversely, circumstances when the cash conversion cycle increases generally consume cash in the form of additional investment in working capital.

The detail calculation of the components of the cash conversion cycle is as follows:

1. Days sales outstanding in accounts receivable = Ending accounts receivable (excluding agency accounts receivable) for continuing operations divided by average daily revenue (inclusive of value-added taxes for foreign operations) for the period.



2. Days inventory on-hand = Ending inventory for continuing operations (excluding agency inventory) divided by average daily cost of revenue (excluding indirect product and service costs) for the period.



3. Days payables outstanding = Ending accounts payable (excluding agency accounts payable) for continuing operations divided by average daily cost of revenue (excluding indirect product and service costs) for the period.

(1) Agency accounts receivable, inventory and accounts payable represent amounts on our balance sheet that include the full value of the product for which the revenue associated with these transactions is recorded under the net method specified in EITF 99-19 (excluding the value of the product sold).

Title	Type	Size
Cash Conversion Cycle Q3 2009		49.3 KB
Cash Conversion Cycle Q2 2009		49.1 KB
Cash Conversion Cycle Q1 2009		49.1 KB
Cash Conversion Cycle Q4 2008		47.5 KB

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