Cash Conversion Cycle Calculator
How many days your cash is tied up — inventory days plus receivable days less payable days — and what shortening it releases.
The cash conversion cycle is days inventory outstanding plus days sales outstanding minus days payables outstanding.
How the cash conversion cycle calculator works
The cash conversion cycle is days inventory outstanding plus days sales outstanding minus days payables outstanding. It measures how long money is out of the business between paying for stock and being paid for it.
A negative cycle means customers pay before suppliers do, which is why supermarkets and subscription businesses can grow without funding working capital. Every day removed releases cash equal to one day of revenue.
Formula: CCC = DIO + DSO − DPO
Worked examples
| Inputs | Cash conversion cycle (days) | Note |
|---|---|---|
| A stock-holding business | 51.72 | 56 days |
| Faster collection | 34.34 | nearly 18 days shorter |
| Longer supplier terms | -3.66 | the cycle goes negative |
FAQFrequently asked questions
What is a good cash conversion cycle?
Shorter is better and negative is best. Under 30 days is efficient; over 90 means growth will consume cash faster than it generates it.
How can a cycle be negative?
When customers pay before suppliers are due. Supermarkets sell stock in days and pay suppliers in weeks, so growth funds itself.
Which lever should I pull first?
Usually receivable days — invoicing promptly and chasing early is cheap. Extending payables strains supplier relationships and squeezing inventory risks stockouts.
Why does DSO use revenue and DIO use COGS?
Because receivables are recorded at selling price and inventory at cost. Mixing the two is a common error that distorts both figures.
What does one day of cycle cost?
One day of revenue, tied up permanently. On a 4.2 million business that is about 11,500 per day of cycle.
Where these figures come from
- Corporate Finance Institute — EBITDA — why EBITDA is a non-GAAP measure with no single definition
- US SEC — Non-GAAP Financial Measures, Compliance & Disclosure Interpretations — the disclosure rules that exist precisely because EBITDA is not standardised
- Australian Securities and Investments Commission — the Australian corporate regulator
Last checked: September 2026. These are standard management-accounting definitions; where a term has no single agreed definition, the page says so.