Cash-to-Cash Cycle Calculator
Calculate working capital conversion period
About this calculator
The Cash-to-Cash Cycle Calculator determines how long it takes for your business to convert investments in inventory and receivables back into cash. This critical working capital metric measures the time between paying suppliers and collecting from customers. Understanding your cash conversion cycle helps optimize cash flow, identify bottlenecks in operations, and improve overall financial efficiency. A shorter cycle means faster cash generation and better liquidity management.
How to use
Enter your Days Sales Outstanding (DSO), Days Inventory Outstanding (DIO), and Days Payable Outstanding (DPO) into the calculator. The tool will automatically compute your cash-to-cash cycle using the formula: DSO + DIO - DPO. Review the result to understand your working capital conversion period in days.
Frequently asked questions
What is a good cash-to-cash cycle time?
Generally, shorter cycles are better. Most healthy businesses aim for 30-90 days, though this varies significantly by industry and business model.
How can I improve my cash conversion cycle?
Reduce inventory levels, collect receivables faster, and negotiate longer payment terms with suppliers to extend your payable period.
What does a negative cash cycle mean?
A negative cycle means you collect cash from customers before paying suppliers, creating positive cash flow and essentially free financing.