Cash Conversion Cycle

Cash Conversion Cycle

Calculation: CCC = DIO + DSO - DPO
DIO = Days Inventory Outstanding
DSO = Days Sale Outstanding (DSO)
DPO = Days Payable Outstanding

The ratio shows how quickly inventories and receipts are converted into Cash.

The number indicates how long your cash is tied up in inventories and receivables (before you get it back from your customer); therefore a lower number is preferred.

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