Cash Conversion Cycle Calculator

Cash conversion cycle (CCC) calculator for inventory, receivables, and payables

The cash conversion cycle (CCC) tells you how long cash is tied up in day-to-day operations. It measures the time between paying suppliers and collecting cash from customers, while accounting for how long you hold inventory. If you run a product business, distribution business, or any business that carries stock and invoices customers, CCC is one of the cleanest ways to see whether growth will help you or hurt you.

This calculator gives you a CCC value in days. A smaller number usually means you get cash back faster and need less working capital to operate. A larger number usually means cash is trapped in inventory and unpaid invoices for longer, which increases the pressure on overdrafts, short-term loans, and owner cash injections. A negative CCC can happen when you get paid quickly (or upfront) but pay suppliers later, which means suppliers are financing part of your operating cycle.

You can use this tool in two ways. The quick method is for people who already know their DIO, DSO, and DPO. The advanced method is for people who only have basic accounting figures like average inventory, accounts receivable, accounts payable, revenue, and cost of goods sold (COGS). You can also leave some values as estimates and still get a useful output, because CCC is mainly a direction and control metric: you watch how it moves over time and compare it to your own targets and industry norms.

Assumptions and how to use this calculator

• CCC is calculated as: DIO + DSO − DPO, measured in days.
• If you use the advanced method, DIO = (Average Inventory ÷ COGS) × Period Days, DSO = (Average Receivables ÷ Revenue) × Period Days, and DPO = (Average Payables ÷ COGS) × Period Days.
• “Average” balances are assumed to represent the period reasonably (for example, average of opening and closing balances, or a monthly average). If you use a single point-in-time balance, results may be skewed.
• Revenue and COGS should be for the same period and should match the period days you enter (for example, 365 days for a year, 90 for a quarter).
• The optional “cash impact” estimate is a rough working-capital proxy using daily revenue and daily COGS. It is not a substitute for a cash flow statement.

Common questions

What is a “good” cash conversion cycle?

There is no universal “good” number. CCC varies by industry and business model. Grocery retail can run very low or even negative CCC because inventory turns fast and customers pay immediately. Project-based or B2B invoice-heavy businesses can have higher CCC because receivables take longer to collect. The useful approach is: set a baseline for your business, then target improvement over time, and compare to peers only when the models are similar.

Why can my CCC be negative?

CCC becomes negative when you receive cash from customers before you pay suppliers, or when payables are stretched longer than the combined inventory and receivables time. This is common in cash businesses with supplier terms (or subscription and prepaid models). It can be a strength, but do not assume it is risk-free: supplier terms can tighten, and stockouts can force you to buy on worse terms.

I do not know my DIO/DSO/DPO. Which inputs should I use?

Use the advanced method and enter the period days, average inventory, average receivables, average payables, revenue, and COGS. If you do not have precise averages, start with simple approximations (for example, average of opening and closing balances). CCC is still useful even if the first version is imperfect, because improvements and trends over time are what matter most.

What should I do if my CCC is high?

Start with the component that is easiest to influence without damaging the business. Common levers include improving inventory purchasing (reduce slow-moving stock, increase sell-through, tighten reorder points), tightening credit terms and collections (faster invoicing, clearer payment terms, follow-up process), and negotiating supplier terms (longer payment terms or better alignment with your cash inflows). Do not chase a lower CCC at the expense of revenue quality or supplier stability.

Does CCC apply to service businesses?

It can, but the meaning changes. Service businesses often have little or no inventory, so DIO may be close to zero. CCC may mostly reflect receivables and payables timing. If you bill upfront, CCC can be low or negative. If you bill in arrears and clients pay slowly, CCC can still be high. In services, you should also monitor utilization, billing lag, and cash runway alongside CCC.