Investors use Capitalization Ratio Formula to measure the efficiency of the company that how quickly the company can buy, sell, and collect on its inventory. So the calculation through this formula is called the sales efficiency calculation.
Cash Conversion Cycle (CCC) Formula
Capitalization Ratio Formula calculated by adding the days inventory outstanding and days sales outstanding and subtract the days payable outstanding from it.
Cash Conversion Cycle=(days inventory outstanding + days sales outstanding)-days payable outstanding