💵 Cash Conversion Cycle Calculator
Calculate cash conversion cycle (CCC)
Average number of days to sell inventory
Average number of days to collect receivables
Average number of days to pay suppliers
How to Use This Calculator
Enter Days Inventory Outstanding (DIO)
Input the average number of days it takes to sell inventory - calculated as (Average Inventory / Cost of Goods Sold) × 365.
Enter Days Sales Outstanding (DSO)
Enter the average number of days it takes to collect receivables - calculated as (Average Accounts Receivable / Revenue) × 365.
Enter Days Payable Outstanding (DPO)
Enter the average number of days it takes to pay suppliers - calculated as (Average Accounts Payable / Cost of Goods Sold) × 365.
Review Cash Conversion Cycle
See the cash conversion cycle - the number of days it takes to convert inventory and receivables into cash, minus days payable. Lower CCC is generally better, indicating faster cash conversion.
Formula
Cash Conversion Cycle = DIO + DSO - DPO
Where: DIO = Days Inventory Outstanding, DSO = Days Sales Outstanding, DPO = Days Payable Outstanding
Example Calculation:
If DIO = 30 days, DSO = 45 days, DPO = 30 days:
• Cash conversion cycle = 30 + 45 - 30 = 45 days
• This means it takes 45 days to convert inventory and receivables into cash
About Cash Conversion Cycle Calculator
A cash conversion cycle (CCC) calculator helps you calculate the cash conversion cycle, which measures how long it takes to convert inventory and receivables into cash, minus the time it takes to pay suppliers. CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO). A lower CCC is generally better, as it indicates faster cash conversion and better working capital management. CCC is an important metric for assessing cash flow efficiency and working capital management.
When to Use This Calculator
- Working Capital Management: Assess cash conversion efficiency
- Cash Flow Analysis: Analyze cash flow cycles
- Financial Analysis: Evaluate working capital efficiency
- Business Planning: Plan cash flow and working capital
Understanding Cash Conversion Cycle
- DIO: Days to sell inventory (lower is better)
- DSO: Days to collect receivables (lower is better)
- DPO: Days to pay suppliers (higher can be better, but don't overextend)
- CCC: Net days to convert inventory/receivables to cash (lower is better)
Why Use Our Calculator?
- ✅ CCC Calculation: Calculate cash conversion cycle accurately
- ✅ Working Capital: Assess working capital efficiency
- ✅ Cash Flow Analysis: Analyze cash flow cycles
- ✅ Financial Planning: Plan cash flow and working capital
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is cash conversion cycle (CCC)?
Cash conversion cycle (CCC) measures how long it takes to convert inventory and receivables into cash, minus the time it takes to pay suppliers. CCC = DIO + DSO - DPO. A lower CCC is generally better, as it indicates faster cash conversion and better working capital management. CCC helps you understand how efficiently your business converts inventory and receivables into cash.
What's a good cash conversion cycle?
A lower CCC is generally better, as it indicates faster cash conversion. However, the "good" CCC depends on the industry and business model. Some industries naturally have longer cycles (like manufacturing). Compare to industry benchmarks and historical trends. Generally, CCC under 30 days is excellent, 30-60 days is good, and over 60 days may need improvement.
How do I reduce cash conversion cycle?
To reduce CCC: (1) Reduce DIO - improve inventory turnover, reduce inventory levels, (2) Reduce DSO - improve receivables collection, offer early payment discounts, (3) Increase DPO (within reason) - negotiate longer payment terms with suppliers, but don't overextend. The goal is to convert inventory and receivables to cash faster while managing payables effectively.
Why is cash conversion cycle important?
CCC is important because it measures cash flow efficiency and working capital management. A lower CCC means faster cash conversion, which improves cash flow, reduces working capital needs, and improves financial health. CCC helps you understand how long cash is tied up in inventory and receivables, and how efficiently your business converts these assets into cash.