Work out working capital cycle instantly with clear inputs, formula shown and shareable results.
The cash conversion cycle is days inventory plus days receivable minus days payable: how long cash is locked up between paying a supplier and being paid by a customer. Multiplying by daily sales converts the days into the actual working capital the cycle consumes.
Cash conversion cycle
CCC = DIO + DSO - DPO
Working capital tied up
Cash tied up = CCC x Average daily sales
Yes. Retailers and marketplaces that sell before paying suppliers run negative cycles, which means growth generates cash instead of consuming it.
Usually DSO through collections discipline. Extending DPO shifts cost onto suppliers and often comes back as price.