Days from cash out to cash back in. The Cash Conversion Cycle Calculator takes days inventory outstanding, days sales outstanding, days payable outstanding and returns cash conversion cycle plus operating cycle (inventory + receivables). Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Cash Conversion Cycle Calculator works
The cycle counts the days between paying suppliers for stock and collecting cash from customers: the days inventory sits, plus the days customers take to pay, minus the days you take to pay suppliers. A shorter cycle needs less working capital; a negative cycle means suppliers finance your sales.
Worked example
With the example values (days inventory outstanding of 45 days, days sales outstanding of 40 days, days payable outstanding of 30 days), the cash conversion cycle is 55 days; operating cycle (inventory + receivables) 85 days. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is cash conversion cycle calculated?
cash conversion cycle = DIO + DSO − DPO.
Which figures do I need?
Days inventory outstanding, days sales outstanding, days payable outstanding. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
