We've all heard the mantra "cash is king." But a fistful of dollars today deserves the royal treatment more than a wad of cash down the road. We want our companies turning their products into cash -- fast!

The cash conversion cycle
Enter the cash conversion cycle. It tells us how quickly a company turns cash invested in inventory into cash in the bank after collecting credit sales from customers and paying off its suppliers. The faster a company can turn over its inventory, the more efficiently it's managing its assets. There are three components of the cycle, and here's how they operate:

• Days Inventory Outstanding (DIO)
Inventory sitting on store shelves or in stockrooms is not doing the company, or the investor, any good. The number of days the inventory sits there measures how quickly management can get those Speedos off the racks and onto the beaches of Malibu. Obviously, lower numbers are better.

DIO = 365 days/(cost of goods sold/average inventory)
• Days Sales Outstanding (DSO)
Outstanding sales are those the company hasn't yet been paid for; they're languishing in accounts receivable. We want our companies to not only make quick sales but also get paid for them right away. The faster, the better.

DSO = 365 days/(sales/average accounts receivable)
• Days Payable Outstanding (DPO)
While we want customers to pay us quickly, we want to take our sweet time paying our bills. By paying suppliers slowly, cash remains available to spend on things a company needs, such as inventory, so we want this number to be higher.

DPO = 365 days/(cost of goods sold/average accounts payable)

Putting it all together
With the three pieces of the puzzle calculated, we can figure out how long a company is taking to get paid for the products its customers are buying from inventory, minus the number of days it takes it to pay its suppliers. The cash conversion cycle, or CCC, equals DIO + DSO - DPO.

Here's a look at how a number of the best-known home-furnishing companies design their cash cycle.

Company

DIO

+

DSO

-

DPO

=

CCC

CAPS Rating (Out of 5)

Williams-Sonoma (NYSE:WSM)

95.5

+

5.0

-

26.4

=

74.1

****

Bed Bath & Beyond (NASDAQ:BBBY)

140.9

+

0.0

-

53.1

=

87.8

***

Pier 1 Imports (NYSE:PIR)

109.7

+

9.8

-

31.5

=

88.0

*

Cost Plus (NASDAQ:CPWM)

127.9

+

0.0

-

24.3

=

103.6

*

Restoration Hardware (NASDAQ:RSTO)

161.5

+

4.6

-

53.1

=

113.0

*

Each week, we look for the top companies in different industries that make fast cash, and this particular group seems to have generated a summer clearance sale with the 60,000 participants in the Motley Fool CAPS investor-intelligence database.

Not every company that makes fast cash will excel. We want only the firms that the CAPS community considers the best. Four- and five-star stocks are the ones the vast majority of CAPS investors believe will outperform the S&P 500.

Of course, this isn't a list of stocks to buy or sell -- just a jumping-off point for further research.

It probably shouldn't surprise us that top-rated Williams-Sonoma -- garnering four out of five stars from CAPS players -- also has the fastest conversion cycle of the group. Even though it reported flattish same-store sales in the most recent quarter and questions abound on whether its Pottery Barn brand has cracked, the CAPS community remains bullish.

• CAPS investor Patrick6k says if his girlfriend's shopping habits are any proof, Williams-Sonoma should continue to be a winner: "This is a solid company and it has a great group of managers. They only have about 600 stores nationwide ... that's around 11 or 12 stores per state. So, I'd say they have plenty of room to grow, and with [return on assets] near 13 percent ... they have pretty good reason to continue that growth.

"This company reminds me of a more diversified and established version of Middleby (NASDAQ:MIDD). They're boring, they have a solid business model, and good inside ownership. It's hard to find something I don't like about this company ... other than how much money I'm losing to them via my girlfriend. Go Long."
• CAPS All-Star investor TMFPhila, with a 98.91 player rating, notes the effects that the convergence of TV and food have had on the specialty retailer: "High-end food preparation is growing in popularity thanks to the emergence of the Food Network. The Food Network's diverse personalities (Giada, [Rachael] Ray, Paula [Deen], etc.) have made cooking 'cool' for the 24-35 age group. WSM will certainly benefit from this trend.

"In addition, the financials look great. \$117m in cash, \$12m in long-term debt, 18% [return on equity], and \$78m in free cash flow make this a stock worth researching further. A 1.4% dividend yield is enticing as well."

So, is the market getting burned, or is it blackened like the best Cajun cooking? Work with thousands of your fellow Foolish investors at Motley Fool CAPS to uncover the best stocks, and convert your money into cash profits. It's absolutely free -- get started today!

Cook up some market-beating returns with a 30-day guest pass to Motley Fool Stock Advisor, where Bed Bath & Beyond is a recommendation. It's also been selected by Motley Fool Inside Value. Middleby is a recommendation of Motley Fool Hidden Gems.

Fool contributor Rich Duprey owns shares of Bed Bath & Beyond but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.