1. Scope
Computes the cash conversion cycle from days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO), and estimates working-capital lockup. It assumes steady-state operations.
2. Inputs and outputs
Inputs
- dio number (days)
Average days inventory is held.
- dso number (days)
Average days to collect from customers.
- dpo number (days)
Average days you take to pay suppliers.
- monthly_cogs number (currency/mo)
Drives the working-capital-tied estimate.
Outputs
- cashConversionCycle
DIO + DSO − DPO, in days (primary value).
- workingCapitalTied
monthly_cogs × (ccc / 30).
Engine source: src/lib/cash-conversion-cycle-calculator/engine.ts
3. Formula / scoring logic
ccc = dio + dso - dpo
working_capital_tied = monthly_cogs * (ccc / 30)4. Assumptions
- DIO, DSO, DPO are trailing averages, not spot values.
- The working-capital estimate scales monthly COGS by the cycle length in months (ccc / 30) — it is not ccc × daily revenue.
- No credit insurance or factoring is netted out.
5. Data sources
6. Known limitations
- Services businesses with no inventory have DIO = 0 by definition. The ratio-based CCC is most meaningful for goods businesses.
- Negative CCC (typical for marketplaces that collect before paying suppliers) indicates customers finance your operations — valuable but not a risk-free signal.
7. Reproducibility
Input
dio = 38, dso = 42, dpo = 28, monthly_cogs = $95,000.
Expected output
cashConversionCycle = 52 days, workingCapitalTied ≈ $164,667 (= 95,000 × 52/30).
8. Change log
- 2026-04-24 methodology page first published.
Worked example
Run live against the same engine this site ships
(/engines/cash-conversion-cycle-calculator.js).
The inputs and outputs below are recomputed on every build and
independently re-verified in CI — they are never hand-authored.
Input
- tool
- cash_conversion_cycle
- dio
- 38
- dso
- 42
- dpo
- 28
- monthly_cogs
- 95000
Output
- primaryLabel
- Cash conversion cycle
- primaryValue
- 52
- primaryFormat
- days
- summary
- CCC = days inventory outstanding + days sales outstanding - days payables outstanding.
- metrics[0].label
- Working capital tied
- metrics[0].value
- 164666.67
- metrics[0].format
- currency
- metrics[1].label
- Inventory days
- metrics[1].value
- 38
- metrics[1].format
- days
- metrics[2].label
- Receivable days
- metrics[2].value
- 42
- metrics[2].format
- days
- metrics[3].label
- Payable days
- metrics[3].value
- 28
- metrics[3].format
- days
- assumptionsEcho.dio
- 38
- assumptionsEcho.dso
- 42
- assumptionsEcho.dpo
- 28
- assumptionsEcho.monthly_cogs
- 95000
Frequently asked questions
- What does the Cash Conversion Cycle Calculator calculate?
- Computes the cash conversion cycle from days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO), and estimates working-capital lockup. It assumes steady-state operations.
- What inputs does the Cash Conversion Cycle Calculator need?
- It takes 4 inputs: dio, dso, dpo, monthly_cogs. Outputs returned: cashConversionCycle, workingCapitalTied.
- What formula does the Cash Conversion Cycle Calculator use?
- The exact computation is: ccc = dio + dso - dpo; working_capital_tied = monthly_cogs * (ccc / 30)
- Can I verify the Cash Conversion Cycle Calculator with a worked example?
- Yes. With dio = 38, dso = 42, dpo = 28, monthly_cogs = $95,000. the tool returns cashConversionCycle = 52 days, workingCapitalTied ≈ $164,667 (= 95,000 × 52/30).
- Where does the Cash Conversion Cycle Calculator get its benchmark data?
- Reference data is sourced from: CFA Institute — CFA Program curriculum, Financial Statement Analysis (as of 2024).
- What can the Cash Conversion Cycle Calculator not tell me?
- Known limitations: Services businesses with no inventory have DIO = 0 by definition. The ratio-based CCC is most meaningful for goods businesses. Negative CCC (typical for marketplaces that collect before paying suppliers) indicates customers finance your operations — valuable but not a risk-free signal.