Cash Conversion Cycle (CCC) Calculator

How to use this CCC calculator

1. Choose “Use dates” (auto-compute period days) or “Use length” (enter days directly).
2. Enter your period totals for Sales and COGS, and your average balances for Inventory, A/R, and A/P.
3. Click Calculate (or press Ctrl/Cmd+Enter). You’ll get DIO, DSO, DPO, and CCC days plus turnover ratios.

Formulas

CCC = DIO + DSO − DPO

• DIO = (Avg Inventory ÷ COGS) × Period Days
• DSO = (Avg Accounts Receivable ÷ Sales) × Period Days
• DPO = (Avg Accounts Payable ÷ COGS) × Period Days

Turnovers are also shown: Inventory = COGS ÷ Avg Inventory; Receivables = Sales ÷ Avg A/R; Payables = COGS ÷ Avg A/P.

Example

Sales £120,000; COGS £75,000; Avg Inv £25,000; Avg A/R £18,000; Avg A/P £12,000; 90-day quarter → DIO ≈ (25,000/75,000)×90 = 30 days; DSO ≈ (18,000/120,000)×90 = 13.5 days; DPO ≈ (12,000/75,000)×90 = 14.4 days; CCC ≈ 30 + 13.5 − 14.4 = 29.1 days.

Informational only — not financial advice. Check definitions used in your reporting (e.g., credit sales vs total sales).

Understanding the Cash Conversion Cycle (CCC)

The Cash Conversion Cycle (CCC) measures how long cash is tied up in the operating cycle— from paying suppliers, to holding inventory, to collecting from customers. CCC turns inventory, receivables, and payables into an easy-to-read number of days, making it a practical way to assess working-capital efficiency and short-term liquidity. A lower (or negative) CCC generally indicates a healthier cash position, because a business is converting outflows to inflows faster—or even getting paid before it pays suppliers.

Formula and components

The CCC formula blends three time-based metrics:

• DIO (Days Inventory Outstanding): (Average Inventory ÷ COGS) × Period Days
• DSO (Days Sales Outstanding): (Average A/R ÷ Sales) × Period Days
• DPO (Days Payables Outstanding): (Average A/P ÷ COGS) × Period Days

Then: CCC = DIO + DSO − DPO. DIO and DSO are “uses” of cash; DPO is a “source” of cash that offsets them.

Why CCC matters

• Liquidity lens: CCC highlights how many days of operating cash are tied up and at risk.
• Operational insight: It surfaces bottlenecks—slow inventory turns, lenient credit terms, or weak collections.
• Comparability: Because CCC is time-based, it travels well across seasons and revenue scales when the period is consistent.

Interpreting the number

A shorter CCC suggests faster cash recovery and less need for external funding. A longer CCC may flag excess stock, slow billing, or supplier terms that require earlier payment. A negative CCC can be a strength: you collect cash before you pay suppliers—common in prepayment or strong-terms models. However, the “right” CCC is context-specific; product mix, seasonality, and industry norms matter.

Practical tips to improve CCC

• Reduce DIO: Forecast demand accurately, rationalize SKUs, and adopt pull-based replenishment or vendor-managed inventory.
• Reduce DSO: Tighten credit policies, invoice promptly, enable digital payment options, and follow up systematically.
• Increase DPO (carefully): Negotiate longer terms, align payment runs with cash inflows, and use early-pay discounts selectively.

Data quality checklist

• Use period totals for Sales and COGS that align with the same date range.
• Compute average balances using beginning/ending values—or, better, monthly averages for seasonal businesses.
• For DSO, if relevant, consider credit sales instead of total sales to avoid understating collection time.

Worked example

Suppose a 90-day quarter with Sales £120,000, COGS £75,000, Avg Inventory £25,000, Avg A/R £18,000, and Avg A/P £12,000. Then DIO ≈ (25,000/75,000)×90 = 30 days; DSO ≈ (18,000/120,000)×90 = 13.5 days; DPO ≈ (12,000/75,000)×90 = 14.4 days. CCC ≈ 30 + 13.5 − 14.4 = 29.1 days. This suggests cash is tied up for about a month after paying suppliers.

Note: CCC is a management metric, not a GAAP/IFRS measure. Always interpret alongside margins, growth, and supplier/customer risk.

FAQ