Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 121

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 5
Chunk 121
---
.8 million and RMB78.8 million (US$11.1 million), respectively was deposited
with financial institutions mainly located in the Chinese mainland, Hong Kong and U. S.

A majority of our expense
transactions are denominated in RMB and a significant portion of our (and our subsidiaries) assets and liabilities (including the VIEs)
are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC certain foreign 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 increased from 12.4 days for the year ended December 31,
2022 to 24.3 days for the year ended December 31, 2023. This was mainly a result of the change in sales mix from online sales to offline
sales resulting in a longer cash conversion cycle. Days sales outstanding increased from 39.1 days for the year ended December 31,
2022 to 50.1 days for the year ended December 31, 2023 and net inventory turnover days decreased from 21.2 days for the year
ended December 31, 2022 to 19.1 days for the year ended December 31, 2023. Also, there is a decrease in net days payables outstanding
of 47.8 days to 44.8 days from the year ended December 31, 2022 to the year ended December 31, 2023.

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