Cash Conversion Cycle Calculator
Profit is not cash. This works out how many days your money is locked up in inventory and unpaid invoices before it comes back — your cash conversion cycle — from five figures off your accounts.
What the cash conversion cycle tells you
The cash conversion cycle (CCC) measures how many days your money is tied up in the business between the moment you pay for stock and the moment you finally collect cash from customers. It is one of the clearest signals of how much working capital a business needs — and whether growth will generate cash or quietly consume it.
A shorter cycle means your cash comes back to you faster, freeing it up to fund growth. A long cycle means cash is stranded in unsold inventory or unpaid invoices. Some of the strongest businesses even run a negative cycle — they collect from customers before they have to pay suppliers, so expansion throws off cash rather than eating it.
The formula
CCC = DIO + DSO − DPO. Days Inventory Outstanding (DIO) = Average inventory ÷ Cost of goods sold × 365. Days Sales Outstanding (DSO) = Accounts receivable ÷ Revenue × 365. Days Payable Outstanding (DPO) = Accounts payable ÷ Cost of goods sold × 365.
Worked example
| Item | Value |
|---|---|
| Average inventory | $50,000 |
| Annual COGS | $300,000 |
| Accounts receivable | $40,000 |
| Annual revenue | $365,000 |
| Accounts payable | $25,000 |
| DIO / DSO / DPO | 61 / 40 / 30 days |
| Cash Conversion Cycle | 71 days |
When to use it
- Forecasting how much working capital your business needs to grow.
- Spotting cash trapped in slow-moving inventory before it becomes a problem.
- Building the case for faster invoicing or fairer supplier terms.
- Benchmarking your cash efficiency against previous periods or competitors.
Assumptions & what’s not included
- It uses annual figures and snapshot balance-sheet values, so it is a point-in-time estimate.
- Seasonal businesses can see big swings the annual average hides — run it at different times of year.
- It assumes inventory, receivables and payables are all valued consistently.
- It is a working-capital measure, not a full cash-flow forecast.
Frequently asked questions
What is the cash conversion cycle?
It is the number of days between paying cash for inventory and collecting cash from the customers you sold it to. It equals Days Inventory Outstanding plus Days Sales Outstanding minus Days Payable Outstanding. A lower number means less cash tied up in the business.
Is a negative cash conversion cycle good?
Usually yes. A negative cycle means you collect from customers before you have to pay suppliers, so your suppliers are effectively financing your operations. Many large retailers run this way.
How can I shorten my cash conversion cycle?
Collect receivables faster (tighter terms, follow-ups, deposits), hold less inventory, or negotiate longer payment terms with suppliers. Any of these frees up cash without needing new funding.
Is my data private?
Yes. Everything runs in your browser. Nothing is sent to a server, stored or shared, and there is no sign-up.