Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 117

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 117
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 exchange transactions are
required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies
other than RMB by us in China must be processed through the PBOC or other PRC foreign exchange regulatory bodies which require certain
supporting documentation in order to take effect the remittance.

The financial institutions
that we use include Bank of China, Industrial and Commercial Bank of China and Agriculture Bank of China, which are Listed Banks in PRC
capital markets. In China, banks are endorsed by the government. While we believe that these financial institutions are of high credit
quality, we continue to monitor their credit worthiness.

We actively manage our cash conversion cycle to improve working capital,
and our cash conversion cycle has decreased from 24.3 days for the year ended December 31, 2023 to 13.5 days for the year ended
December 31, 2024. This was mainly a result from the collectability improvement of receivables. Days sales outstanding decreased from
50.1 days for the year ended December 31, 2023 to 41.8 days for the year ended December 31, 2024 and net inventory turnover days
decreased from 19.1 days for the year ended December 31, 2023 to 13.7 days for the year ended December 31, 2024. Also, there
is a decrease in net days payables outstanding of 44.8 days to 42.1 days from the year ended December 31, 2023 to
the year ended December 31, 2024.

We intend to finance our future
working capital requirements and capital expenditures from cash generated from operating activities and funds raised from financing activities.
We believe that our current cash and cash equivalents, together with our cash generated from operating activities and new financing activities,
will be sufficient to meet our present and anticipated working capital requirements and capital expenditures. However, we may decide to
enhance our liquidity position or increase our cash reserve for future investments or operations through additional capital and finance
funding. Issuance of additional equity securities, including convertible debt securities, would dilute our earnings per share. The incurrence
of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial
covenants that restrict our operations and our ability to pay dividends to our shareholders.

We also utilize short-term
and long-term banking