Cash Conversion Cycle Calculator

What is a Cash Conversion Cycle?

The cash conversion cycle (CCC) is a financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. It is a crucial indicator of a company’s efficiency in managing its working capital. The CCC is calculated by adding the number of days it takes for a company to sell its inventory, the number of days it takes to collect cash from customers after a sale, and subtracting the number of days it takes to pay suppliers for inventory purchases.

Formula

The formula to calculate the cash conversion cycle (CCC) is:

\[ CCC = DIO + DSO - DPO \]

Where:

\( DIO \) is the days of inventory outstanding.
\( DSO \) is the days sales outstanding.
\( DPO \) is the days payables outstanding.

Example

Let's say a company has 30 days of inventory outstanding (DIO), 45 days sales outstanding (DSO), and 20 days payables outstanding (DPO). Using the formula:

\[ CCC = 30 + 45 - 20 = 55 \text{ days} \]

So, the cash conversion cycle (CCC) is 55 days.

Formula for Cash Conversion Cycle

Formula: \( CCC = DIO + DSO - DPO \)

\( CCC \): Cash conversion cycle
\( DIO \): Days inventory outstanding
\( DSO \): Days sales outstanding
\( DPO \): Days payable outstanding

Example: \( CCC = 50 + 30 - 20 \)

Days inventory outstanding: 50 days
Days sales outstanding: 30 days
Days payable outstanding: 20 days

Cash Conversion Cycle Equation

Formula: \( CCC = DIO + DSO - DPO \)

\( CCC \): Cash conversion cycle
\( DIO \): Days inventory outstanding
\( DSO \): Days sales outstanding
\( DPO \): Days payable outstanding

Example: \( CCC = 45 + 35 - 25 \)

Days inventory outstanding: 45 days
Days sales outstanding: 35 days
Days payable outstanding: 25 days

Cash Conversion Cycle Formula Accounting

Formula: \( CCC = DIO + DSO - DPO \)

\( CCC \): Cash conversion cycle
\( DIO \): Days inventory outstanding
\( DSO \): Days sales outstanding
\( DPO \): Days payable outstanding

Example: \( CCC = 40 + 25 - 15 \)

Days inventory outstanding: 40 days
Days sales outstanding: 25 days
Days payable outstanding: 15 days

Cash Conversion Cycle Formula Investopedia

Formula: \( CCC = DIO + DSO - DPO \)

\( CCC \): Cash conversion cycle
\( DIO \): Days inventory outstanding
\( DSO \): Days sales outstanding
\( DPO \): Days payable outstanding

Example: \( CCC = 55 + 40 - 30 \)

Days inventory outstanding: 55 days
Days sales outstanding: 40 days
Days payable outstanding: 30 days