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 = (average inventory/annual cost of goods sold) * 365 days
  • 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 not only to make quick sales, but also get paid for them right away. The faster, the better.
    DSO = (average accounts receivable/annual sales) * 365 days
  • 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, companies have more cash available to spend on things they need, like inventory, so we want this number to be higher.
    DPO = (average accounts payable/annual cost of goods sold) * 365 days

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.

This week, I'm looking at companies that make the components comprising the soaring solar industry -- photovoltaic modules, grid systems, cells, panels, and chips -- and are used to light up our growing taste for alternative energy. So let's see which of them shines brightest on their way to bringing home the cash.

Company

DIO

+

DSO

-

DPO

=

CCC

CAPS Rating (out of 5)

Evergreen Solar (NASDAQ:ESLR)

57.2

+

75.8

-

117.2

=

15.8

***

First Solar (NASDAQ:FSLR)

40.7

+

23.6

-

26.5

=

37.8

**

Akeena Solar (NASDAQ:AKNS)

72.1

+

27.6

-

49.2

=

50.5

***

SunPower (NASDAQ:SPWR)

45.3

+

61.7

-

43.8

=

63.2

***

SunTech Power (NYSE:STP)

58.6

+

43.9

-

12.4

=

90.1

****

Energy Conversion Devices (NASDAQ:ENER)

96.5

+

86.7

-

79.2

=

104.0

****

Canadian Solar (NASDAQ:CSIQ)

91.9

+

52.5

-

14.0

=

130.4

**

Source: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Each week, we look for the top companies in different industries that make fast cash. It seems that the 77,000 participants in the Motley Fool CAPS investor-intelligence database have better-than-average feelings for these particular firms, as the majority of them are rated three stars or better. Of course, this isn't a list of stocks to buy or sell -- just a jumping-off point for further research.

First Solar first in class
Although it has the shortest conversion cycle of the seven companies listed, Evergreen hasn't yet been profitable, though its losses are declining. There are only a handful of solar companies that have been profitable, with both First Solar and Motley Fool Rule Breakers selection SunTech Power showing significant improvements over time. Following a blow-out third-quarter earnings report last month, First Solar flourished, and is seen as one of the few companies that can survive without government subsidies.

More than 1,100 investors have cast their vote for First Solar, and while almost three-quarters are bullish, the company hasn't earned a very high rating. That duality is perhaps summed up best by CAPS player borisvolodnikov, who views the alternative-energy company as a momentum play:

I actually think this company is going to implode in the near future. This stock is being driven up purely on momentum alone. People are buying into it because it looks that solar is the energy source of the future (working for an environmental engineering consulting firm, I know better). A lot of people are going to get fleeced on this one.

Don't be foiled again
So, do you agree or disagree? Will First Solar continue to be a fast-cash and profitable company or will it implode as borisvolodnikov predicts? Visit Motley Fool CAPS to weigh in. And while you're there, give us your picks for fast-cash stocks, as you work with thousands of your fellow Foolish investors to uncover the best stocks and convert your money into cash profits. Best of all, it's absolutely free -- get started today!

SunTech Power is a Rule Breakers selection. Grab 30 days of free stock picks with a risk-free trial subscription.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.