Cash conversion cycle: Following Cash Through Inventory and Collections
The cash conversion cycle combines inventory days and collection days, then subtracts supplier-payment days. It estimates how long operating cash is tied up in the cycle.
Use the Cash conversion cycle Calculator to enter your own figures and compare the result with the worked example below.
Cash conversion cycle formula
CCC = DIO + DSO − DPO
Worked example
| Item | Example value |
|---|---|
| Days inventory outstanding | 50 days |
| Days sales outstanding | 30 days |
| Days payable outstanding | 40 days |
| Cash conversion cycle | 40 |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Use compatible time periods for all three components. A negative cycle is possible and needs interpretation in the business model's context.
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Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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