SellersCalc

Cash flow math

Cash Conversion Cycle Calculator

How many days each dollar stays trapped between paying suppliers and collecting from customers.

Cash conversion cycle = DIO + DSO − DPO. It counts the days cash is locked in operations: days inventory sits before selling (DIO), plus days customers take to pay (DSO), minus the days you take to pay suppliers (DPO). Hold inventory 45 days, collect in 15, and pay suppliers on 30-day terms, and your CCC is 45 + 15 − 30 = 30 days — every dollar spends a month tied up before it returns. Lower is better, and a negative cycle means suppliers are effectively financing your growth. Enter your three components to get the cycle in days.

Cash Conversion Cycle Calculator — your numbers

Cash conversion cycle (days)

30

Estimate only. Results reflect exactly the numbers you enter — verify against your own accounting before making pricing decisions.

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Worked examples

Typical e-commerce store

Days inventory outstanding (DIO) 45
Days sales outstanding (DSO) 15
Days payable outstanding (DPO) 30
Cash conversion cycle (days) 30

A 30-day cycle: a full month of costs must be financed out of pocket.

Prepaid DTC, slow-moving stock

Days inventory outstanding (DIO) 60
Days sales outstanding (DSO) 0
Days payable outstanding (DPO) 20
Cash conversion cycle (days) 40

Card payments make DSO zero, but 60 days of inventory still costs 40 days of float.

Frequently asked questions

How do I calculate DIO, DSO and DPO in the first place?

DIO = average inventory ÷ COGS × 365. DSO = accounts receivable ÷ revenue × 365 — near zero for card-paid stores, meaningful for wholesale. DPO = accounts payable ÷ COGS × 365. Use the same period (usually a year or a quarter) for all three so the days are comparable.

Is a negative cash conversion cycle possible?

Yes, and it is the best position available: customers pay you before you pay suppliers, so growth generates cash instead of consuming it. Amazon famously runs a negative CCC. Merchants get there by combining fast-turning inventory, upfront card payment, and 45–60 day supplier terms.

How do I shorten my cash conversion cycle?

One lever per component: cut DIO by ordering smaller quantities more often and clearing dead stock; cut DSO by taking payment upfront or invoicing wholesale buyers immediately with shorter terms; extend DPO by negotiating longer supplier terms once you have order history. Ten days off the cycle frees ten days of costs in cash.

Why does the CCC matter more when I am growing fast?

Because the cycle is financed again at the new, larger scale every time revenue steps up. A store with a 30-day cycle that doubles monthly costs must find a whole extra month of the new spending in cash before sales return it. Fast growth with a long CCC is how profitable companies run out of money.

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Part of the Store Finance collection.