Cash Conversion Cycle Calculator
Work out how many days your cash is tied up in inventory and receivables.
Results
Days sales outstanding (DSO)
On average, how many days it takes customers to pay you. —
Days inventory outstanding (DIO)
On average, how many days inventory is held before it is sold. —
Days payables outstanding (DPO)
On average, how many days it takes you to pay your suppliers. —
Cash conversion cycle
DSO + DIO − DPO. The number of days from paying the supplier to receiving cash from the customer. The business finances this period with its own or borrowed funds — the shorter the cycle, the less working capital it needs. —
Value of one day
Annual revenue / 365. Roughly this much cash is released if you shorten the cash conversion cycle by one day. —
Cash released by shortening the cycle by one day
Glossary of terms
- Annual revenue
- Income from sales during the year (excluding VAT).
- Cost of goods sold
- The cost of purchasing or producing the goods sold during the year.
- Accounts receivable
- Amounts your customers have not yet paid you.
- Inventories
- Goods, raw materials and finished products held in stock.
- Accounts payable
- Amounts you have not yet paid your suppliers.
- Days sales outstanding (DSO)
- On average, how many days it takes customers to pay you.
- Days inventory outstanding (DIO)
- On average, how many days inventory is held before it is sold.
- Days payables outstanding (DPO)
- On average, how many days it takes you to pay your suppliers.
- Cash conversion cycle
- DSO + DIO − DPO. The number of days from paying the supplier to receiving cash from the customer. The business finances this period with its own or borrowed funds — the shorter the cycle, the less working capital it needs.
- Value of one day
- Annual revenue / 365. Roughly this much cash is released if you shorten the cash conversion cycle by one day.
Results are indicative and do not constitute financial advice.