# What is my cash conversion cycle?

Computes the cash conversion cycle in days: days of inventory plus days sales outstanding minus days payables outstanding, from sales, cost of goods sold and balances.

- Page: https://www.acalculator.org/finance/cash-conversion-cycle-calculator
- JSON spec: https://www.acalculator.org/finance/cash-conversion-cycle-calculator.json
- Version: 86df132078bc

## Default answer

Example with the default inputs (Credit sales $40,000,000.00, Cost of goods sold $30,000,000.00, Inventory at the end $3,000,000.00, Accounts receivable at the end $6,000,000.00, Accounts payable at the end $2,800,000.00, Days in the period 365): With 36.5 days of inventory, 54.75 days to collect and 34.07 days to pay suppliers, the cash conversion cycle is 57.18 days.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| rev | Credit sales | Sales on credit for the period. Use net sales if credit sales are not shown. |
| cogs | Cost of goods sold | Cost of goods sold for the same period. |
| ib | Inventory at the start | Leave empty to use the ending balance alone, or type an average as the ending balance. |
| ie | Inventory at the end | Inventory on the balance sheet at the end of the period. |
| arb | Accounts receivable at the start | Leave empty to use the ending balance alone, or type an average as the ending balance. |
| are | Accounts receivable at the end | What customers owe at the end of the period. |
| apb | Accounts payable at the start | Leave empty to use the ending balance alone, or type an average as the ending balance. |
| ape | Accounts payable at the end | What the business owes suppliers at the end of the period. |
| days | Days in the period | The days the sales cover: 365 for a year, 90 or 91 for a quarter. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| ccc | Cash conversion cycle (days) | Days of inventory + days sales outstanding − days payables outstanding. |
| dio | Days of inventory (DIO) | Average inventory ÷ cost of goods sold × days in the period. |
| dso | Days sales outstanding (DSO) | Average accounts receivable ÷ credit sales × days in the period. |
| dpo | Days payables outstanding (DPO) | Average accounts payable ÷ cost of goods sold × days in the period. |
| operating | Operating cycle (days) | Days of inventory + days sales outstanding. |

## Method

Average balance = (start + end) ÷ 2, or the end balance alone. Days of inventory = average inventory ÷ cost of goods sold × days. Days sales outstanding = average accounts receivable ÷ credit sales × days. Days payables outstanding = average accounts payable ÷ cost of goods sold × days. Cash conversion cycle = days of inventory + days sales outstanding − days payables outstanding.

## Assumptions

- Sales and cost of goods sold cover the period whose days you enter; the balances are from its start and end.
- Each period equals days ÷ turnover, where turnover = sales or cost of goods sold ÷ average balance.
- Arithmetic is exact on the typed decimals; days show to 2 decimals, halves up.

## Worked examples

1. rev = $40,000,000.00, cogs = $30,000,000.00, ie = $3,000,000.00, are = $6,000,000.00, ape = $2,800,000.00, days = 365 gives ccc = 57.183333, dio = 36.5, dso = 54.75, dpo = 34.066667, operating = 91.25. Source: OpenStax, Principles of Finance, 19.1 What Is Working Capital? (cash cycle = inventory conversion period + receivables collection period − payables deferral period, each 365 ÷ turnover; King Sized Products). https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital: 36.5 + 54.7 − 34 = 57.2 days (rounded).
2. rev = $40,000,000.00, cogs = $30,000,000.00, ie = $2,800,000.00, are = $5,500,000.00, ape = $3,300,000.00, days = 365 gives ccc = 44.104167, dio = 34.066667, dso = 50.1875, dpo = 40.15. Source: OpenStax, Principles of Finance, 19.1 What Is Working Capital? (cash cycle = inventory conversion period + receivables collection period − payables deferral period, each 365 ÷ turnover; King Sized Products). https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital: 34.07 + 50.21 − 40.15 = 44.10 days in Table 19.2 (rounded).
3. rev = $900,000.00, cogs = $600,000.00, ib = $110,000.00, ie = $130,000.00, arb = $70,000.00, are = $80,000.00, apb = $45,000.00, ape = $55,000.00, days = 360 gives ccc = 72, dio = 72, dso = 30, dpo = 30, operating = 102. Source: OpenStax, Principles of Finance, 19.1 What Is Working Capital? (cash cycle = inventory conversion period + receivables collection period − payables deferral period, each 365 ÷ turnover; King Sized Products). https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (averages of start and end balances).
4. rev = $5,000,000.00, cogs = $4,000,000.00, ie = $100,000.00, are = $50,000.00, ape = $900,000.00, days = 365 gives ccc = -69.35, dio = 9.125, dso = 3.65, dpo = 82.125, operating = 12.775.

## FAQ

### What is the cash conversion cycle?

The cash conversion cycle (CCC), or cash cycle, is the number of days between paying suppliers for inventory and collecting cash from customers for the goods made from it. The shorter it is, the less cash a business has tied up in running its operations.

### How do I calculate the cash conversion cycle?

Add days of inventory and days sales outstanding, then subtract days payables outstanding. King Sized Products held inventory 36.5 days, collected from customers in 54.75 days and paid suppliers in 34.07 days, so its cycle was 36.5 + 54.75 − 34.07 = 57.18 days.

### How do I calculate days of inventory, DSO and DPO?

Divide each average balance by its flow for the period and multiply by the days: inventory and accounts payable by cost of goods sold, accounts receivable by credit sales. This is the same as dividing the days by each turnover ratio.

### What is a good cash conversion cycle?

Shorter is better: less money waits in inventory and receivables. Compare with similar businesses and with your own past periods. Holding less inventory, collecting faster and paying suppliers later all shorten the cycle.

### Can the cash conversion cycle be negative?

Yes. A business that sells quickly, is paid at once and pays suppliers weeks later collects cash before it pays for the goods. With 9.13 days of inventory, 3.65 days to collect and 82.13 days to pay, the cycle is −69.35 days.

### What is the difference between the operating cycle and the cash conversion cycle?

The operating cycle is days of inventory plus days sales outstanding: the time from buying goods to collecting cash for them. The cash conversion cycle subtracts the days the business takes to pay its suppliers, because those days are financed by the suppliers.

## Sources

- OpenStax, Principles of Finance, 19.1 What Is Working Capital?: cash cycle = inventory conversion period + receivables collection period − payables deferral period; each period = 365 ÷ turnover, with inventory and payables turnover on cost of goods sold, receivables turnover on credit sales, and average balances of (beginning + ending) ÷ 2; King Sized Products (57.2 days before and 44.10 days after its changes). https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (retrieved 2026-10-19)