Cash Conversion Cycle Calculator
See how many days your cash is locked in inventory and receivables before it comes back. Enter five numbers from your financial statements and get DIO, DSO, DPO and your cash conversion cycle.
One-time cash released. New CCC: 0 days.
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How to calculate the cash conversion cycle
The cash conversion cycle counts the days between paying for stock and getting paid by customers. Add inventory days to receivable days, then subtract the days you take to pay suppliers.
How long stock sits before it is sold. Average inventory from the balance sheet divided by COGS from the P&L, times days.
Example: ₹14 Cr ÷ ₹84 Cr × 365 = 60.8 daysHow long customers take to pay. Average trade receivables divided by revenue (credit sales if you have them), times days.
Example: ₹18 Cr ÷ ₹120 Cr × 365 = 54.8 daysHow long you take to pay suppliers. Average trade payables divided by COGS, times days. Take payables from the balance sheet or AP ageing.
Example: ₹11.5 Cr ÷ ₹84 Cr × 365 = 50.0 daysUses COGS, not revenue, because inventory is carried at cost.
Average inventory ÷ COGS × daysUses revenue, because receivables are billed at selling price. See the DSO calculator for countback and best possible DSO.
Average receivables ÷ revenue × daysUses COGS, the standard base. Purchases are a fair alternative when stock levels swung sharply.
Average payables ÷ COGS × days| Revenue | ₹120 Cr |
| COGS | ₹84 Cr |
| DIO | 60.8 days |
| DSO | 54.8 days |
| DPO | 50.0 days |
| Cash conversion cycle | 65.6 days |
- Work out inventory days: 14 ÷ 84 × 365 = 60.8
- Work out receivable days: 18 ÷ 120 × 365 = 54.8
- Work out payable days: 11.5 ÷ 84 × 365 = 50.0
- Combine them: 60.8 + 54.8 − 50.0 = 65.6 days
- Each day you cut is worth about ₹32.9 lakh of revenue (120 crore ÷ 365)
What is a good cash conversion cycle?
Lower is better, and below zero is possible. A negative CCC means customers pay you before you pay suppliers, so suppliers are funding your growth. Compare yourself with your own past quarters and close peers, not with a single universal number.
| Industry | Indicative CCC | What drives it |
|---|---|---|
| Manufacturing | 60 to 120 days | Raw material and work in progress plus long B2B credit terms |
| Retail and eCommerce | −20 to 40 days | Card and UPI collections in days, long terms with brands; marketplaces often run negative |
| Enterprise SaaS | 20 to 60 days | No inventory, so CCC is mostly DSO; upfront annual billing pulls it down |
| Logistics | 30 to 60 days | Little inventory, but freight bills wait on proof of delivery while fuel and fleet costs are paid fast |
Indicative ranges based on published working capital studies and listed company filings. They are not audited benchmarks.
Get a one-page report with your DIO, DSO, DPO, cash conversion cycle and the cash a shorter cycle frees.
How to shorten your cash conversion cycle
Every lever sits in one of the three components. Start with the one that is furthest from your peers.
DSO starts the day you deliver, not the day you bill. Same-day e-invoices cut days with no customer conversation.
Unapplied receipts keep paid invoices in receivables. Match bank credits to invoices every day so DSO shows reality.
Review SKUs with more than 90 days of cover. Clearing them lowers DIO and frees warehouse space.
Paying on approval rather than on the due date quietly lowers DPO. Schedule payment runs by due date.
In India, micro and small suppliers must be paid within 45 days. Lengthen DPO with larger suppliers, not with them.
Quarterly CCC hides swings. A monthly view shows whether a change came from stock, collections or payments.
Frequently asked questions
Add days inventory outstanding and days sales outstanding, then subtract days payable outstanding. With DIO of 60.8, DSO of 54.8 and DPO of 50.0 days, the cash conversion cycle is 65.6 days.
It means you collect from customers before you pay suppliers. Large retailers and marketplaces often run negative cycles, which lets suppliers fund growth. It is healthy as long as you still pay suppliers on agreed terms.
Usually, because less cash is locked in working capital. But a very low CCC achieved by running out of stock, refusing credit to good customers or paying suppliers late can cost more than it saves.
Either works if you stay consistent. Most Indian companies use 365 for annual figures and 90 for a quarter. Just make sure revenue, COGS and the days cover the same period.
Set inventory to zero, so DIO is zero, and CCC becomes DSO minus DPO. For SaaS, deferred revenue from upfront billing can make the real cash cycle shorter than the formula shows.
Roughly one day of revenue for a day off DSO, and one day of COGS for a day off DIO or added to DPO. For a company with ₹120 crore of annual revenue, one day of DSO is about ₹32.9 lakh.
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