Cash conversion cycle, visually

The cash conversion cycle measures how many days your cash is tied up between paying suppliers and receiving customer payments. Inventory days plus receivable days, minus payable days. A negative CCC means customers pay you before you pay suppliers — the desirable direction. This calculator computes each piece and shows you where to attack.

What this calculator does

CCC = DIO + DSO − DPO.

DIO (Days Inventory Outstanding) — see the Days Sales of Inventory tool.

DSO (Days Sales Outstanding) — average days to collect from customers after a sale.

DPO (Days Payable Outstanding) — average days you take to pay suppliers.

The CCC measures how long each dollar is locked in your operating cycle. Lower is better; negative means suppliers finance your business.

Where the leverage is

Reducing DIO by 5 days is worth the same as reducing DSO by 5 days. But they come from completely different teams and require different actions. This tool splits out each component so your inventory analyst and AR collector can each see their opportunity.

What the scenarios mean

The scenarios show what happens if you shave 5 or 10 days off each component. The "annual capital freed" figure is what you'd return to working capital or invest in growth if you achieved that target. Each lever requires different work:

DIO −5 days: usually from inventory tools (this site is full of them). Faster turn, smaller safety stock, better forecasting.
DSO −5 days: AR collections, tighter credit terms, prepayment discounts. Not inventory's problem.
DPO +5 days: negotiating longer payment terms with suppliers. Often the biggest lever, but it has relationship costs.

What this calculator doesn't do

Doesn't model seasonality in cash flow.
Doesn't include prepayments or deposits.
Doesn't compute ROIC or ROE; that's a separate financial analysis.

Related tools

Days Sales of Inventory — the DIO piece.
Inventory Turnover — another view.
EOQ with Discounts — to act on the inventory side.