The cash conversion cycle measures how long it takes your company to sell it’s inventory. collect invoices, and pay vendors. It’s an important metric because it shows how efficiently your business turns operating activity into cash.
An increasing cash conversion cycle may indicate that cash is tied up for longer. This can happen because of slower collections, slower inventory turnover, or shorter payment terms from suppliers.
Formula: Cash Conversion Cycle = Days Inventory Outstanding + Days Sales Outstanding − Days Payable Outstanding
How to use the calculator
Enter the following information to calculate your cash conversion cycle:
- Days Sales Outstanding: Enter your DSO, which measures how long customers take to pay invoices. Need help? Use our DSO calculator.
- Days Inventory Outstanding: Enter your DIO, which measures how long your company holds inventory before it is sold or used. Need help? Use our DIO calculator.
- Days Payable Outstanding: Enter your DPO, which measures how long your company takes to pay suppliers. Need help? Use our DPO calculator.
Important: All inputs should be for the same reporting period.
| Days Sales Outstanding | |
| Days Inventory Outstanding | |
| Days Payable Outstanding | |
| Cash Conversion Cycle | 75.0 days |
The cash conversion cycle should be evaluated in context. A lower number generally means your business converts operating activity into cash more quickly. A higher number may indicate that cash is tied up longer in inventory or receivables. Keep in mind that CCC varies by industry, so it is best compared against similar companies and your own trend over time.
The following table shows benchmark cash conversion cycle ranges for selected industries.
| Industry | Typical CCC Range |
|---|---|
| Transportation | 30 to 75 days |
| Wholesale | 35 to 65 days |
| Manufacturing | 50 to 90 days |
| Healthcare | 30 to 60 days |
| Construction | 60 to 120 days |
Note: This calculator is for educational purposes only and not intended as financial advice. Please consult a professional if you require financial advice.
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Marco Terry is the Managing Director of Commercial Capital LLC and has over two decades of experience in asset-based finance. He has worked with small and mid-sized companies across the United States, Canada, and Australia. Marco holds a Master of Science in Finance.