Cash Conversion Cycle Calculator
Cash Conversion Cycle Calculator
Component |
Description |
Days Inventory Outstanding (DIO) |
The average number of days it takes to sell the entire inventory. |
Days Sales Outstanding (DSO) |
The average number of days it takes to collect payment after a sale. |
Days Payable Outstanding (DPO) |
The average number of days it takes to pay invoices from suppliers. |
Cash Conversion Cycle (CCC) |
The total number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales. |
Formula |
CCC = DIO + DSO – DPO |
Purpose |
Used to measure the efficiency of a company’s management in converting inventory into sales and receivables into cash. |