Business

Cash Conversion Cycle Calculator

Calculate how long it takes to convert investments in inventory and operations into cash — and see how much working capital your CCC is consuming.

Annual Revenue ($)

Annual COGS ($) Cost of Goods Sold — used for DIO and DPO calculations

Avg Accounts Receivable ($) Average balance owed to you by customers (from balance sheet)

Avg Accounts Payable ($) Average balance you owe to suppliers (from balance sheet)

Avg Inventory Value ($) Average inventory on hand. Enter 0 for service businesses.

Cost of Capital / Borrowing Rate (%) Used to calculate annual financing cost of working capital tied up in CCC

Days Inventory Outstanding (DIO)

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Days Sales Outstanding (DSO)

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Days Payable Outstanding (DPO)

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Cash Conversion Cycle (CCC)

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Working Capital Needed

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Annual Financing Cost of CCC

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Understanding the Cash Conversion Cycle

The CCC measures how many days it takes to convert investments in inventory and other resources into cash flows from sales. A lower (or negative) CCC means better cash flow efficiency. Amazon famously runs a negative CCC — they collect cash from customers before they pay suppliers.

DIO = (Avg Inventory ÷ COGS) × 365
DSO = (Avg Accounts Receivable ÷ Revenue) × 365
DPO = (Avg Accounts Payable ÷ COGS) × 365
CCC = DIO + DSO − DPO
Working Capital Needed = (Daily Revenue × CCC days)
Annual Financing Cost = Working Capital × Cost of Capital %

CCC Benchmarks by Industry

Amazon/E-commerce (negative CCC): −20 to −30 days — collect before paying suppliers
Retail: 20–45 days — inventory turns fast, limited AR
Manufacturing: 60–90 days — high inventory, long production cycles
B2B Services: 20–50 days — no inventory, but AR can be slow
SaaS (subscription): Near zero or negative — collect upfront, low COGS

What is a good cash conversion cycle?

Lower is better. A CCC of 0–30 days is generally healthy for product businesses. Service businesses and SaaS companies often hit 0–15 days. Retail like Walmart runs around 10–15 days. Manufacturing can run 60–90 days, which is fine if it's industry-typical and well-financed. A negative CCC (like Amazon at −25 days) means the business is using supplier financing to fund operations — the best possible position. Compare to industry peers, not absolute numbers. A CCC that's increasing quarter-over-quarter is a warning sign of inventory buildup, slowing collections, or payment terms changes.

How do I improve my CCC?

Three levers: (1) Reduce DIO — cut excess inventory, improve demand forecasting, negotiate just-in-time delivery. (2) Reduce DSO — send invoices immediately, offer early payment discounts (2/10 net 30), implement automated reminders, require deposits on large orders. (3) Increase DPO — negotiate longer payment terms with suppliers (net 60 vs net 30), use credit cards for small purchases (effectively 30 days free), consolidate vendors for leverage. Each 5-day improvement in CCC on a $2M revenue business frees up ~$27,000 in working capital.