Cash Conversion Cycle Calculator
The cash conversion cycle and the working capital it demands. A negative cycle means customers pay before suppliers do, which funds growth for free and is why retail and subscription businesses scale without capital.
Also called: working capital cycle, ccc calculator.
70 days between paying suppliers and collecting from customers, which ties up $11,900,000.00. Cash is committed for the length of the cycle, which growth makes larger.
How this is calculated
The cycle adds the days stock sits and the days customers take to pay, then subtracts the days you take to pay suppliers. The result is how long your own cash is committed. Multiplying by daily revenue converts it to the amount of working capital the business requires. A negative cycle is the prize: it means suppliers finance the business, which is how large grocers and subscription companies grow without raising money.
how long cash is out of the business: stock held plus collection time, less the credit you take- DIO, DSO, DPO
- Inventory, receivable and payable days
Method and limits
What it assumes
- Steady-state operations across the year.
What it deliberately does not model
- Stretching payables is the easiest way to improve this and the fastest way to lose supplier goodwill.
- Seasonal businesses see the figure move sharply through the year.
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Frequently asked questions
- Can the cycle be negative?
- Yes, and it is excellent. It means you collect from customers before paying suppliers, so growth generates cash instead of consuming it.