How it works
Cash conversion cycle = days inventory outstanding + days sales outstanding − days payable outstanding.
Input definitions
- Inventory days (DIO)
- Enter the value in the labeled unit.
- Receivable days (DSO)
- Enter the value in the labeled unit.
- Payable days (DPO)
- Enter the value in the labeled unit.
A worked example
- Inventory days (DIO)
- 50
- Receivable days (DSO)
- 30
- Payable days (DPO)
- 40
Assumptions & limits
Enter consistent-period averages. This model excludes seasonality, cash sales timing changes and financing charges.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Can a cash conversion cycle be negative?
Yes. If payable days exceed inventory days plus receivable days, customer cash may arrive before suppliers are paid. The calculation itself permits negative results.
Are these investment and borrowing results guaranteed?
No. These are deterministic estimates from the inputs and stated method, not predicted returns or lending offers. Actual fees, tax, timing and contractual terms may differ.
Are tax, overhead and refunds included automatically?
Only the costs and rates explicitly entered or described in the formula are included. Use consistent currencies and periods, and check what your own accounting policy requires.
How does the Cash conversion cycle tool work?
Cash conversion cycle = days inventory outstanding + days sales outstanding − days payable outstanding.
What are the assumptions and limits of Cash conversion cycle?
Enter consistent-period averages. This model excludes seasonality, cash sales timing changes and financing charges.