Measure how many days your cash is tied up between paying suppliers and collecting from customers. Enter inventory, accounts receivable, accounts payable, revenue and cost of goods sold to get days inventory outstanding, days sales outstanding, days payable outstanding and the cash conversion cycle.
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Balance sheet (average balances preferred)
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Income statement
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365 for a year (some use 360), 90 for a quarter, 30 for a month.
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If entered, DPO uses purchases instead of COGS.
Enter your values to see the result.
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How to use the Cash Conversion Cycle Calculator
Enter inventory, accounts receivable and accounts payable, ideally the average of beginning and ending balances.
Enter revenue and cost of goods sold for the same period.
Set the days in the period: 365 for a year, 90 for a quarter.
Optionally enter purchases to calculate DPO on purchases instead of COGS.
Read DIO, DSO, DPO and the cycle, then check which lever frees the most cash.
Cash conversion cycle formula
CCC = DIO + DSO − DPO
DIO (days inventory outstanding) = Inventory ÷ COGS × Days
Example for a year: inventory $120,000 and COGS $800,000 give DIO = 54.8 days; receivables $150,000 and revenue $1,200,000 give DSO = 45.6 days; payables $90,000 give DPO = 41.1 days. The cash conversion cycle is 54.8 + 45.6 − 41.1 = 59.3 days.
Each day cut from DIO or added to DPO frees roughly one day of COGS in cash; each day cut from DSO frees roughly one day of revenue. The table in the calculator applies this to your numbers.
Frequently asked questions
What is the cash conversion cycle formula?
Cash conversion cycle = DIO + DSO − DPO. DIO = inventory ÷ COGS × days, DSO = accounts receivable ÷ revenue × days, and DPO = accounts payable ÷ COGS × days. The result is the number of days between paying for inventory and receiving cash from customers.
What is a good cash conversion cycle?
Shorter is better, because less cash is tied up in operations. What is achievable depends on the industry: retailers that collect at the till and pay suppliers later can even have a negative cycle, while manufacturers with long production times have longer cycles. Track the trend over time and compare with peers.
What does a negative cash conversion cycle mean?
It means you collect cash from customers before you have to pay suppliers, so suppliers effectively finance your operations. Some large retailers and online marketplaces operate this way. It is generally a strong position, as long as supplier relationships stay healthy.
Should DPO use COGS or purchases?
Purchases are more precise because payables arise from purchases, but purchases are often not reported, so most analysts use COGS. If you know purchases, enter them and the calculator will use them for DPO.
What is the difference between the operating cycle and the cash conversion cycle?
The operating cycle = DIO + DSO, the total time from buying inventory to collecting cash from the sale. The cash conversion cycle subtracts DPO, because the time you take to pay suppliers reduces how long your own cash is tied up.
Should I use average or ending balances?
Average balances, (beginning + ending) ÷ 2, are more accurate because revenue and COGS accumulate over the whole period. Ending balances are fine for a quick estimate when balances are stable.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.