Cash flow & working capital

Cash conversion cycle calculator (DSO, DIO, DPO)

The cash conversion cycle measures how many days pass between paying for inventory and collecting from the customer. Every day you remove releases cash permanently.

Inputs

Result

Cash conversion cycle

55.15

Days sales outstanding (DSO)
51.1
Days inventory outstanding (DIO)
52.72
Days payable outstanding (DPO)
48.67
Cash tied up per day
USD 8,219.18
Cash released by your target
USD 123,287.7
  • A negative cycle means customers fund your operations before suppliers are paid.

How to use this calculator

  1. 1Enter annual revenue and cost of goods sold.
  2. 2Enter average receivables, inventory and payables balances.
  3. 3Test a target reduction in days to value the cash it would release.

The three components

Days inventory outstanding = inventory / COGS x 365. Days sales outstanding = receivables / revenue x 365. Days payable outstanding = payables / COGS x 365. The cycle is DIO + DSO − DPO.

Shortening DSO is usually the fastest win: deposits, shorter terms, automated reminders and card payment on invoice routinely remove 10-15 days without any customer loss.

What a day is worth

One day of cycle equals roughly annual revenue divided by 365 in trapped cash. On 3m of revenue, cutting 15 days frees about 123,000 — often more than a business can borrow on the same terms.

Cash released this way is permanent, needs no interest, and improves the balance sheet a buyer inherits.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/cash-conversion-cycle-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"revenue":3000000,"cogs":1800000,"receivables":420000,"inventory":260000,"payables":240000,"targetDaysSaved":15,"currency":"USD"}'

Frequently asked questions

What is a good cash conversion cycle?

It is industry-specific: services often run 30-45 days, distribution 60-90, and some retail and subscription models are negative because customers pay first.

Can stretching supplier terms fix the cycle?

It helps on paper, but pushing DPO too far damages supplier pricing and reliability. Reducing DSO and DIO creates more durable value.

Does this affect my business valuation?

Yes. A shorter cycle reduces the working capital a buyer must fund, which raises the equity value they can justify paying.