What is the cash conversion cycle formula?

CCC = DIO + DSO − DPO, all measured in days.

How is DPO calculated?

DPO = accounts payable ÷ cost of goods sold × days in the period.

Can the cash conversion cycle be negative?

Yes, when a business collects from customers before it pays its suppliers.

Is a shorter cycle always better?

Generally, but stretching payables too far can damage supplier relationships or cost early-payment discounts.

Cash Conversion Cycle Formula (CCC)

Home › Finance Formulas › Cash Conversion Cycle Formula (CCC)

Cash Conversion Cycle Calculator

The cash conversion cycle measures how long cash is tied up in the operating cycle of a business: from the moment it pays for inventory to the moment it collects cash from customers who bought that inventory. It adds days inventory outstanding (how long stock sits) and days sales outstanding (how long customers take to pay), and subtracts days payables outstanding (how long the business takes to pay its suppliers).

Formula

CCC = DIO + DSO − DPO

Where

DIO: days inventory outstanding = inventory ÷ COGS × days
DSO: days sales outstanding = receivables ÷ revenue × days
DPO: days payables outstanding = payables ÷ COGS × days

Calculator

Average inventory

Cost of goods sold

Average accounts receivable

Revenue

Average accounts payable

Days in the period

Result and step-by-step solution

Cash conversion cycle

53.53 days

Cash is tied up for about 53.5 days between paying suppliers and collecting from customers.

DIO
50,000.00300,000.00 × 365 = 60.83
DSO
40,000.00500,000.00 × 365 = 29.2
DPO
30,000.00300,000.00 × 365 = 36.5
Combine
60.83 + 29.2 − 36.5 = 53.53 days

How to use the formula

The calculator computes each component from raw balance-sheet and income-statement figures. Inventory and payables are compared with cost of goods sold, receivables with revenue, and all three are scaled to the same number of days so they can be added.

In the example, stock is held for 60.83 days, customers pay after 29.20 days and suppliers are paid after 36.50 days, so the cycle is 53.53 days. Every day cut from the cycle frees working capital; at 500,000 of annual sales, one day is worth roughly 1,370 of cash. Some retailers and online platforms run a negative cycle, collecting from customers before paying suppliers. Improve the components with the DIO and DSO pages.

Frequently asked questions

What is the cash conversion cycle formula?: CCC = DIO + DSO − DPO, all measured in days.
How is DPO calculated?: DPO = accounts payable ÷ cost of goods sold × days in the period.
Can the cash conversion cycle be negative?: Yes, when a business collects from customers before it pays its suppliers.
Is a shorter cycle always better?: Generally, but stretching payables too far can damage supplier relationships or cost early-payment discounts.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.