Small-business finance
Cash conversion cycle
Combine receivable inventory and payable days into cash tied-up time.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
CCC=DSO+DIO-DPO; working cash estimate=daily operating cost*CCC.
All day measures use consistent periods and denominators. Revenue-based DSO and cost-based inventory/payables ratios are inputs; operating-cash exposure is an approximation, not an accounting balance.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Receivable collection days (days): Actual time from logs/calendar/statement, or an explicitly labeled future schedule. Keep the period in receivable collection days consistent with all matching costs/outputs.
- Inventory holding days (days): Actual time from logs/calendar/statement, or an explicitly labeled future schedule. Keep the period in inventory holding days consistent with all matching costs/outputs.
- Payable days (days): Payables days on a documented credit-purchase basis; any COGS proxy must be explicit.
- Daily operating cash cost (selected currency): Daily operating CASH cost proxy, not daily sales.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Cash conversion cycle is 50.00 days for the illustrative inputs below.
Example inputs
- Receivable collection days: 30.00 days
- Inventory holding days: 45.00 days
- Payable days: 25.00 days
- Daily operating cash cost: $1,000.00
- Cash conversion cycle
- 50.00 days
- Signed operating cash exposure
- $50,000.00
- Negative exposure indicates supplier financing under these assumptions, not a requirement to hold negative cash. This is a simplified operating-cost proxy.
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Combine receivable inventory and payable days into cash tied-up time.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.