Business calculators
Cash conversion cycle calculator.
See how many days your cash is tied up between paying suppliers and collecting from customers, and what one day is worth.
Cash conversion cycle (CCC) = DIO + DSO − DPO. DIO is days inventory outstanding, DSO is days sales outstanding and DPO is days payables outstanding.
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Result
Worked example
A business holds inventory for 60 days (DIO), waits 45 days to collect from customers (DSO) and takes 30 days to pay suppliers (DPO). CCC = 60 + 45 − 30 = 75 days. With $1,200,000 of annual COGS, one fewer day of DIO frees $1,200,000 ÷ 365 = about $3,288 of cash; with $1,800,000 of annual credit sales, one fewer day of DSO frees about $4,932.
Formulas and sources
The FDIC Money Smart for Small Business curriculum (cash flow module) defines the cash conversion cycle as days inventory outstanding plus days sales outstanding minus days payables outstanding, and notes that a shorter cycle means inventory is turned into cash faster. The SEC's Beginners' Guide to Financial Statements defines the inventory turnover ratio as cost of sales divided by average inventory for the period.
From balances, this page uses the standard arithmetic: DIO = average inventory ÷ COGS × days in period; DSO = average receivables ÷ credit sales × days; DPO = average payables ÷ COGS (or purchases, if you select it) × days. Those three day-count conversions are simple arithmetic on the ratios and are not spelled out in either source.
Cash released per day
Each day of DIO or DPO is worth annual COGS ÷ 365 (or annual purchases ÷ 365 for a purchases-based DPO); each day of DSO is worth annual credit sales ÷ 365. This is a rough one-off estimate that assumes volume and prices stay flat. In balances mode, period figures are scaled to 365 days.
Limits
Conventions differ: some analysts use sales instead of COGS for DIO, or year-end instead of average balances. Pick one and use it consistently when comparing periods. A shorter cycle is not always better if it costs you sales or supplier goodwill. This is a math tool, not accounting advice, and no figure here is an industry benchmark.