Cash Conversion Cycle Calculator
See how many days your cash is tied up between paying suppliers and collecting from customers. Enter your inventory, receivables, payables, COGS, and revenue to calculate the full cash conversion cycle with DIO, DSO, and DPO breakdowns.
The cash conversion cycle (CCC) measures the number of days it takes for a company to convert its investments in inventory and other resources into cash from sales. The formula is: CCC = DIO + DSO - DPO.
- DIO (Days Inventory Outstanding): How long inventory sits before being sold. (Average Inventory / COGS) x 365.
- DSO (Days Sales Outstanding): How long customers take to pay. (Average AR / Revenue) x 365.
- DPO (Days Payable Outstanding): How long you take to pay suppliers. (Average AP / COGS) x 365.
For example, if DIO is 91 days, DSO is 37 days, and DPO is 46 days, the CCC is 91 + 37 - 46 = 82 days. That means 82 days pass between when you pay for inventory and when you collect cash from selling it.
Why CCC Matters
A shorter CCC means the business generates cash faster, reducing the need for external financing. Amazon famously operates with a negative CCC (around -30 days), meaning it collects from customers before paying suppliers. This is a massive competitive advantage that funds growth without borrowing.
To improve your CCC, focus on the component with the most room for improvement: sell inventory faster (reduce DIO), collect from customers sooner (reduce DSO), or negotiate longer payment terms with suppliers (increase DPO).